The world is no longer fighting wars with guns alone — semiconductors, also known as chips, are now at the center of a global geopolitical battle. The Chip War is not just a race for technological supremacy, it’s a high-stakes conflict shaping the future of economies, defense capabilities, and digital dominance.
For a rapidly advancing nation like India, this invisible battlefield presents both a challenge and an opportunity. As the world’s fifth-largest economy seeks to become a global tech hub, understanding the chip war is crucial.
Understanding the Chip War: A Battle for Technological Supremacy
Semiconductors, often called the “new oil” of the digital age, are tiny chips that power everything from smartphones and laptops to cars, medical devices, and defense systems. This race involves controlling the design, manufacturing, and distribution of these critical components, which are essential for modern technology and national security.
The Global Chip War
The Chip War refers to the fierce global competition among nations—mainly the United States, China, Taiwan, South Korea, and increasingly India—to dominate the semiconductor supply chain. Chips are the foundational technology that powers smartphones, cars, satellites, data centers, artificial intelligence, and even missiles. Here’s why it matters:
- 80% of chip manufacturing happens in East Asia, especially Taiwan and South Korea.
- The US leads in chip design, but outsources manufacturing to Asia.
- China is aggressively investing in domestic chip production to reduce dependency.
- In response, the US has enforced tech bans and export controls, especially against Chinese firms like Huawei.
This fierce race for chip supremacy is no longer just business—it’s a matter of national security.
The term “Chip War” gained prominence during the COVID-19 pandemic when supply chain disruptions exposed the fragility of global semiconductor production, concentrated heavily in East Asia. The U.S., for instance, implemented export controls to limit China’s access to advanced chip-making technologies, aiming to curb its technological rise.
In response, China has pursued aggressive self-reliance strategies, such as its “Made in China 2025” initiative, to reduce dependence on foreign chips. This geopolitical tug-of-war has ripple effects across the globe, including for emerging tech hubs like India.
As Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology, noted during his visit to Bengaluru for the VLSI Design Conference 2025, “India is arguably the world’s first or second country in terms of chip design talent, right next to the United States.” Yet, India’s journey to becoming a semiconductor manufacturing powerhouse is just beginning, and the Chip War is shaping its path.
Why the Chip War Matters for India
India’s tech ambitions are intricately tied to its ability to secure a stable supply of semiconductors. From powering its digital revolution—think Unified Payments Interface (UPI), RuPay cards, and DigiYatra—to fueling advancements in defense, automotive, and artificial intelligence (AI), semiconductors are the backbone of India’s technological growth.
However, India currently imports over 90% of its semiconductors, making it vulnerable to global supply chain disruptions. The Chip War exacerbates this vulnerability while also presenting a unique opportunity for India to emerge as a key player in the global semiconductor ecosystem.
Key Impacts of the Chip War on India
| Aspect | Impact on India |
|---|---|
| Supply Chain Risks | Disruptions in global chip supply, as seen during COVID-19, affect India’s automotive, electronics, and defense sectors. |
| Geopolitical Leverage | Restrictions on China by the U.S. create opportunities for India to attract investments as an alternative manufacturing hub. |
| Talent Advantage | India’s 20% share of global semiconductor design talent positions it as a leader in chip design, but manufacturing lags. |
| Economic Growth | Building a domestic chip industry could contribute to India’s $30 trillion economy goal by 2047 under Viksit Bharat. |
| Technological Sovereignty | Reducing import dependency enhances India’s strategic autonomy in critical technologies. |
India’s Semiconductor Ambitions: A Strategic Response to the Chip War
India is not standing still in the face of the Chip War. The government’s India Semiconductor Mission (ISM), launched in December 2021, is a cornerstone of its strategy to build a self-sustaining semiconductor ecosystem. With a $10 billion investment, the ISM aims to foster chip design, manufacturing, and packaging capabilities. Here’s how India is navigating the Chip War to advance its tech ambitions:
1. Leveraging Global Supply Chain Shifts
The U.S.-China tech rivalry has prompted global companies to diversify their supply chains away from China. India is positioning itself as an attractive alternative, offering subsidies, infrastructure, and a vast pool of skilled engineers. Major players like Micron, Foxconn, Applied Materials, and Lam Research have announced significant investments in India:
- Micron is building a $2.75 billion semiconductor facility in Sanand, Gujarat, supported by 50% central government funding and 20% state subsidies.
- Foxconn partnered with Vedanta to establish a $19.5 billion chip-making facility in Dholera, Gujarat, aiming to produce 40,000 wafers per month within two and a half years.
- Applied Materials is investing $400 million in an engineering center, while Lam Research is committing $25 million to train 60,000 Indian engineers.
These investments signal global confidence in India’s potential as a semiconductor hub, driven by the need to reduce reliance on China amid the Chip War.
2. Reviving Domestic Capabilities
India’s Semiconductor Laboratory (SCL) in Mohali, which produces 180-nanometer chips for space and defense applications, is undergoing a $2 billion modernization to manufacture more advanced 28-nanometer chips.
As Anshuman Tripathi, a member of the National Security Advisory Board, told The Economic Times, “Few semiconductor manufacturers can claim that their chip has gone to Mars or Moon, which SCL can add to its kitty.” Upgrading SCL is a strategic move to meet domestic demand for legacy chips while building capabilities for advanced nodes.
3. Fostering Chip Design Excellence
India’s strength lies in its vast pool of chip design talent, contributing 20% of the global workforce in this area. Institutions like IISc Bangalore, IIT Bombay, and the Semiconductor Fabless Accelerator Lab (SFAL) are driving innovation in chip design.
The Design Linked Incentive (DLI) scheme supports startups and companies developing semiconductor products, encouraging innovation in AI, chiplets, and 3D-IC packaging. As Jaswinder Ahuja, former managing director of Cadence India, noted, “Startups, unencumbered by legacy constraints, can reimagine design approaches and drive innovation.”
4. Building Strategic Alliances
India is forging partnerships with semiconductor powerhouses like the U.S., Japan, and South Korea to secure technology transfers and access to critical raw materials. The Quad framework (U.S., India, Japan, Australia) is being explored for semiconductor cooperation, enhancing supply chain resilience. For instance, Samsung is collaborating with India to educate youth about the semiconductor industry, addressing workforce shortages.
5. Focusing on Sustainability
India’s semiconductor strategy emphasizes green manufacturing practices, such as using renewable energy and efficient waste management systems in fabrication plants. Adhering to environmental, social, and governance (ESG) standards not only supports sustainability but also attracts global investors who prioritize ethical practices.
Challenges in India’s Semiconductor Journey
Despite its progress, India faces significant hurdles in its quest to become a semiconductor powerhouse:
- Infrastructure Gaps: Building a modern semiconductor fabrication unit (fab) requires massive investments, reliable power, and clean water—areas where India faces challenges.
- Talent Shortages: While India excels in chip design, it needs more skilled workers in manufacturing and advanced fabrication processes.
- Technological Lag: India is focusing on mature nodes (e.g., 28nm and above), while global leaders like TSMC produce cutting-edge 2nm and 3nm chips. As Chris Miller explained, “It took Taiwan and Korea decades to build their chip industries. India should expect continued development, but it’s not going to go from an initial level to Taiwan-level overnight.”
- Geopolitical Risks: The Chip War introduces uncertainties, such as potential future restrictions on India’s access to advanced technologies, as noted by Jaswinder Ahuja.
Opportunities Amid the Chip War
The Chip War is a double-edged sword for India. While it highlights vulnerabilities in global supply chains, it also creates opportunities for India to capitalize on its strengths:
- Attracting Global Investment: As companies seek alternatives to China, India’s favorable policies and subsidies make it an appealing destination.
- Innovation in Mature Technologies: Older process technologies (e.g., 180nm) are still in high demand for automotive, defense, and IoT applications. India can innovate in these areas, as Miller noted, “There’s a lot of innovation in older process technologies that are being repurposed for new applications, especially with AI.”
- Job Creation: The semiconductor industry is projected to generate 1 million jobs in India by 2028, boosting economic growth and technological expertise.
India’s Path Forward: A Vision for Technological Sovereignty
To succeed in the Chip War, India must adopt a multi-pronged approach:
- Invest in R&D: Targeted investments in research and development, intellectual property, and advanced skill development are critical for long-term success.
- Strengthen Infrastructure: Addressing power, water, and logistical challenges will make India a more attractive destination for semiconductor manufacturing.
- Foster Public-Private Partnerships: Collaboration between the government, private companies, and academia can accelerate progress.
- Diversify Supply Chains: Reducing dependency on any single country for raw materials and components will enhance resilience.
- Embrace Global Cooperation: Strategic alliances with like-minded nations will provide access to cutting-edge technologies and markets.
India’s ambition to become a significant player in the global semiconductor landscape is not merely about economic growth; it’s deeply intertwined with national security and strategic autonomy. A robust domestic semiconductor industry means less vulnerability to global supply chain disruptions and geopolitical pressures.
As the “Chip War” continues to reshape the global tech order, India’s proactive approach today will determine its standing in tomorrow’s digital world. The journey is challenging, but the prize – technological self-reliance and a leading role in the digital age – is well worth the effort.
