India should build capabilities in design & advanced packaging: NITI Aayog

Bengaluru: Semiconductors are evolving from standalone components into tightly integrated systems that underpin the digital economy. This structural shift presents a timely opportunity for India to leapfrog legacy stages and position itself as a competitive force across critical segments of the global semiconductor supply chain, said NITI Aayog in its report ‘Future of India’s Semiconductor Industry’.

To realise this opportunity, it said India needs to move beyond being a downstream consumer to becoming a co-creator of frontier technologies that will shape global compute leadership. This calls for building capabilities in design, advanced packaging and strategic manufacturing.

Interestingly, the global semiconductor landscape is entering a transformative phase, and that includes fundamentally different types of chips. The shift toward AI accelerators such as GPUs (Graphics Processing Units), NPUs (Neural Processing Units), and domain specific processors is redefining semiconductor design requirements, pushing the industry beyond traditional logic chips toward heterogeneous, application-optimised architectures, the report stated.

“This transition is triggering profound changes across the semiconductor value-chain, from the materials used (advanced nodes, compound semiconductors and wide bandgap materials) to manufacturing processes (specialised fabrication, co-design with software and energy efficient nodes) and increasingly to advanced packaging techniques, such as chiplets, 2.5D/3D integration and system in package solutions,” the report added.

The semiconductor industry is evolving with a surge in demand for high-performance computing and quantum computing, and the industry is responding as quantum materials and neuromorphic architectures begin to mature, offering glimpses into the next frontier of computing. Also, innovations in 3D-packaging and chiplets create new pathways to performance.

India can leapfrog as there are potential opportunities, including investing in next-generation quantum and neuromorphic computing architectures for advanced performance, GaN- (Gallium Nitride) and SiC-based (Silicon Carbide) chips for EVs, renewable energy and telecom infrastructure.

With chips becoming the foundation of everything from smartphones to defence systems, countries are racing globally to build semiconductor self-sufficiency. Rising geopolitical tensions, supply-chain vulnerabilities and the strategic importance of chip technology are majorly driving this global push, NITI Aayog said.

For India, the urgency is even greater due to significant import dependence, national security risk, drain on forex and societal upliftment.

India’s heavy reliance on imported semiconductor products has led to sizeable forex outflows over the years. India has cumulatively spent almost $150 billion on importing crucial semiconductor products during FY17-25. India’s imports of semiconductor products grew at a CAGR of 23% between FY17 and FY25, and if this pace persists, the annual import cost could increase to $240 billion by 2035, the report stated.

It also said there is a necessity to build the talent backbone for the country’s semiconductor future. Future skills for the semiconductor industry include 3D stacking, AI/ML algorithms, equipment technicians, and flip-chip technology, among others.

It added that India must prioritise the creation of a large, standardised pipeline of fab-ready technicians, trained specifically for cleanroom operations, equipment handling, contamination control, statistical process control (SPC) and yield management.