Focus on design, packaging over wafer race: NITI Aayog

Chennai: India should focus on its current strengths and aim for global leadership on design, outsourced semiconductor assembly and testing (OSAT), advanced packaging, and critical semiconductor materials, including wide bandgap and advanced packaging materials, rather than chasing the wafer race, according to a NITI Aayog report released on Friday.

The report argued that it should prioritise capital allocation and talent based on strategic importance and global value chain integration, contrasting with the govt’ rhetoric and stated goal of ISM 2.0, announced in February, which included a roadmap for advanced manufacturing of 3 and 2 nanometre technology nodes.

NITI Aayog recommends pivoting away from continuing the catch-up game in the foundry race and focusing on advanced packaging, system integration and manufacturing scale, which matter as much as transistor nodes in the current era. It added that the country should be pragmatic and selective in advanced technology nodes. Mature-node logic, speciality analogue and mixed-signal chips and compound semiconductors such as Silicon Carbide (SiC) and Gallium Nitride (GaN), which power India’s industrial and strategic sectors, matter most to India’s economy, it said.

Raja Manickam, founder of iVP Semi, said India should focus on well-defined, high-value, mature foundational semiconductor products rather than cutting-edge products.

“Power semiconductors, simple logic, and catalogue chips are easier to design and manufacture, have strong existing demand, and can be produced in fabs with a comparatively lower capex, with roughly $400–$500 million. Foundational chips can generate large volumes, which helps India learn manufacturing at scale and attracts the supporting ecosystem, such as equipment makers, chemicals, materials suppliers, etc.,” he said, adding, “Treat advanced node goals as longer-term after foundational capacity is established and use incentives strategically to develop domestic, non-Chinese equipment ecosystems in the country, he added.

Ashok Chandak, president of IESA and SEMI India, said India should focus on areas where it can compete today while continuing to invest in future capabilities. While design, packaging and mature-node segments can deliver near-term global relevance, he said India should avoid creating an artificial distinction between mature nodes and advanced technologies, as a successful semiconductor ecosystem requires both. Countries leading in advanced-node manufacturing have built their capabilities over decades, and India must continue investing in R&D, process technologies, pilot lines and future-node readiness, he added.

The report argues that India should target $120- 150 bn in the semiconductor value chain by 2035.