As commercial production begins at numerous semiconductor plants in India, industry leaders are shifting focus to the next stage of development—the localization of materials, gases, and components required for these manufacturing facilities to operate.
Representatives from companies such as Kaynes Semicon, Merck, INOX Air Products, and L&T Semiconductor Technologies stated at the Semicon 2026 event that India has an opportunity to deepen its supply chain around the emerging manufacturing base. These statements were made across various public platforms during the three-day event.
Nanni Torres, General Manager of Kaynes Semicon, noted that 'from the idea to implementation, we have proven that India can do it,' adding that 'the first level of hurdles has already been overcome.' The Kaynes plant in Sanand began production on March 31, 2026, and several semiconductor facilities are now operating commercially in India.
Torres pointed to areas such as lead frames, molding compounds, and interconnect wires as having significant potential for localization. According to data presented by them, lead frames can account for 5% to 15% of production costs, molding compounds for 4% to 8%, and interconnect wires for 2% to 8%, which, he said, represents a huge market capture opportunity.
However, there is a qualification issue. Torres explained that while established suppliers of semiconductor materials often operate for decades, the certification process for a new supplier can take nine to eighteen months. Kaynes is also working to qualify multiple suppliers of critical components instead of depending on a single source.
Benjamin Hein, CEO of Merck Electronics, emphasized that the viability of the fabs will require parallel local investments in ultra-pure chemicals and gases for semiconductors, safe material handling, and the presence of certified domestic suppliers. These remarks confirm the industry view that semiconductor manufacturing capacity must be accompanied by a deeper local supply chain of materials.
Localization also extends to specialty gases. According to Hein, one semiconductor chip may require over 500 specialty chemicals and 50 gases, some of which must have a purity exceeding 99.999%. Diganta Kumar Sharma, Head of Strategy and Business Development at INOX Air Products, reported that the company currently produces about 12 semiconductor gases in India and plans to add another 10. Nevertheless, he clarified that even after expansion, about 20–25 gases needed by the industry may continue to be imported.
Sharma stated that if the goal is to develop a deeply localized semiconductor industry, then 'gases and chemicals cannot be imported into India.' INOX has already allocated Rs 500 crore for expanding gas purification capacities, creating import-related supply chains, and implementing advanced logistics and packaging infrastructure. Furthermore, the company acquired land in Dholera to establish an Electronic Specialty Gas Center, which will supply ultra-high purity gases to fabs and OSAT facilities.
Sharma added that further investments will depend on whether chip manufacturers provide greater demand transparency to suppliers. He warned, 'if fabs, OSATs, and ATMPs do not sign binding contracts with suppliers, people will always hesitate.' Special attention must be paid to gas infrastructure, which needs to be planned concurrently with semiconductor plants, not added after production starts. As he stressed: 'You cannot bolt on a facility later than when the fab starts operating. You must do it right at the beginning.'
Opportunities extend beyond materials and gases. Sandeep Kumar, CEO of L&T Semiconductor Technologies, believes that building a globally competitive Indian industry will require hundreds of domestic semiconductor companies. Since there are over 20,000 different semiconductor products in the world, no single company can cover more than a small fraction of the market, necessitating the creation of a wide network of specialized domestic enterprises.
Kumar noted that India already possesses competencies in digital computing, analog, and radio frequency technologies, but it needs to deepen expertise in areas such as system architecture, high-power chips, memory, optical interconnects, and end-to-end supply chain management.
Government policy is also moving towards this broader supply chain. The Semicon 2.0 program includes machinery and materials as one of six areas of focus, alongside chip design, fabs, advanced packaging, R&D, and talent. The government also announced receiving investment proposals ranging from $11 to $12 billion, covering equipment, materials, gases, chemicals, and semiconductor substrates.
This shift marks a transition from building semiconductor plants to developing what these plants consume locally. Thus, the next phase for India is not just about adding fabs and packaging units, but about creating a network of material manufacturers, gas suppliers, chip developers, and specialized producers around them.