Prime Minister Narendra Modi inaugurated commercial operations at CG Semi’s semiconductor assembly and test facility in Sanand, Gujarat. It’s India’s third operational semiconductor facility under the India Semiconductor Mission, with peak capacity of 300 million units per year.

The facility is a manufacturing plant, not a chip fabrication facility. It assembles and tests semiconductors. That’s less advanced than fabrication but still strategically important. India has zero chip fabrication plants currently operating. Assembly and testing is a step.

India’s Chip Ambitions Take Shape

India announced the Semiconductor Mission in 2021 with the goal of building domestic chip manufacturing capacity. The motivations were strategic—reduce dependence on Taiwan and South Korea for critical semiconductors—and economic, creating jobs and attracting investment.

Three facilities now operate. Each plays a role. Assembly and testing is labor-intensive but less capital-intensive than fabrication. India can build these more quickly and profitably than attempting full fab operations.

The 300 million unit capacity is significant. For context, global smartphone shipments are roughly 1.2 billion units annually. A 300 million capacity facility can serve a meaningful portion of India’s domestic demand and export to neighboring regions.

Why Sanand, Gujarat

Gujarat is India’s industrial heartland. The state has a strong manufacturing base, developed infrastructure, and government backing. Modi, who was chief minister of Gujarat before becoming PM, has consistently favored the state for industrial investment.

Locating the facility in Gujarat also positions it for exports. The state has ports and logistics networks. Chips manufactured in Sanand can be shipped to Southeast Asia and other regional markets.

The Larger Chip Strategy

Assembly and testing is phase one. India’s long-term goal is to build fabrication capacity. That’s years and billions of dollars away. Current facilities are stepping stones.

The government has offered subsidies and incentives to attract semiconductor manufacturers. Foreign companies are interested because of geopolitical risks in Taiwan and rising US-China tensions. India offers an alternative manufacturing hub.

India will never be Taiwan overnight. But three facilities operating shows the country is serious about chip independence.