Toolmakers commit the biggest new money at India's Rs 1.27 lakh crore chip phase
Modi said India has moved past policy and plant construction into commercial chip production. The fresh investment announced at Semicon India 2026 came from two equipment suppliers, Applied Materials and Lam Research.
The Investor · Invest desk
What happened
- Modi told Semicon India 2026 that the country had entered a second phase of its semiconductor programme, moving beyond policy announcements and plant construction towards commercial production of chips.
- That second phase, Semicon 2.0, carries an outlay of Rs 1.27 lakh crore and widens the focus from large chip factories to equipment, materials, design, research, supply chains and skilled manpower.
- Twelve projects were approved in the mission's first phase across fabrication, packaging and other parts of the value chain, and three of them have started commercial production.
- Applied Materials announced an India Vision 2035 plan to invest $5 billion, covering R&D, expansion of the domestic semiconductor supply chain and talent development.
Why it matters
- What doesn't add up contradiction The two published accounts put Applied Materials' $5 billion on different clocks: ten years makes it about $500 million a year, five years about $1 billion, and the pace decides how much India-based supply chain it can fund by 2035.
- Who has to decide decision Modi asked industry leaders to lead R&D in the country, so the bill for advanced development work falls to corporate budgets.
- What's now possible capability Micron's plan to assemble and test tens of millions of chips at Sanand this year and hundreds of millions next year gives memory customers Indian packaging volume they can schedule against.
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Lam Research's Rs 10,000 crore is about 7.9 per cent of the Rs 1.27 lakh crore behind the mission's second phase [26], and it goes into silicon ingot production and processing for advanced chip technologies [15]. Sesha Varadarajan, Lam's COO, said the firm would invest the sum "to establish our first silicon component manufacturing facility in the country" [16]. He also said "we are increasing our partnerships with suppliers across India in specialised materials, precision components, gases, chemicals, metrology and manufacturing services" [17].
Applied Materials is buying position upstream as well, with a 140-acre advanced semiconductor research park and a stated aim of expanding its India-based supply-chain capacity ten-fold by 2035 [5].
The urgency comes from the import line. India spent almost $150 billion on semiconductor product imports between FY17 and FY25, an average of about $16.7 billion a year [21][29]. The government puts the growth rate at 23 per cent compounded, which on trend gives $240 billion of annual imports by 2035 [21]. Sustained ten years, 23 per cent multiplies a base by 7.9, so that projection implies an FY25 run-rate near $30 billion [28]. Domestic demand is projected to exceed $200 billion by FY35 [14]. Trend imports therefore sit at or above the size of the market they supply. Demand growth on its own leaves domestic plants no room [30], so they have to take share from imports. SEMI's CEO Ajit Manocha estimated the industry would cross $1.3 trillion this year and $2 trillion by 2030 [19]. That makes India's projected $110 billion of FY30 demand roughly 5.5 per cent of the world total [27].
Micron's Sanand plant is the clearest producing asset in either account. Sanjay Mehrotra, its CEO, said "Earlier this year, we began commercial production at Sanand" [7], and that "Our current production capacity already exceeds the memory required for India's entire laptop market" [23]. The plant is shipping DRAM and NAND to customers globally, and Mehrotra said Indian teams had contributed to more than 3,700 patents, inventions and disclosures [6][18].
The pitch rests on trust. Modi said "The world needs new and trusted locations for chip manufacturing and India is preparing itself for this" [2]. At the same event he said "And today, when supply chains are being weaponised, its importance becomes much greater" [9]. Neither the Indian Express nor The Hindu account of the speech mentioned Taiwan or China [22]. Wayne Allan of ASML said "India will become increasingly important globally" [24]. Infineon's CEO Jochen Hanebeck called India a "market of tremendous importance" and said hiring there was up 28 per cent [12]; the company has more than 2,800 employees in the country [10].
The pledges and the pitch sit at different points in the chain. Ingots, tools, supplier partnerships and research are what got funded at this event. I would expect the phase to register first as equipment and materials revenue booked in India, and only later as wafer output. That expectation breaks if a first-phase project brings logic fabrication into volume production on this outlay. It also breaks if the upstream spending pulls Indian suppliers into the toolmakers' own purchasing fast enough to bend the 23 per cent import curve [21].
What to watch
- Whether the count of first-phase projects in commercial production moves past three.
- Whether the one lakh workers Ashwini Vaishnaw said would be trained are hired into the plants under construction.
- Whether reported semiconductor imports break from the 23 per cent compound trend before 2035.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
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- [1]
Prime Minister Narendra Modi inaugurated SEMICON India 2026 in New Delhi and pitched India as an alternative manufacturing hub at a time when chip companies are looking to diversify their global supply chains.
- [2]
"The world needs new and trusted locations for chip manufacturing and India is preparing itself for this," Modi said.
- [3]
The government has moved to Semicon 2.0, a Rs 1.27 lakh crore programme that widens the focus beyond large chip factories to semiconductor equipment, materials, design, research and development, supply chains and skilled manpower.
- [4]
Applied Materials announced its India Vision 2035, under which it will invest $5 billion, including on R&D, expanding the domestic semiconductor supply chain and developing talent.
- [5]
Applied Materials announced a new 140-acre advanced semiconductor research park and said it aims to expand its India-based supply-chain capacity ten-fold by 2035.
- [6]
Micron Technology CEO Sanjay Mehrotra said the company's Sanand facility in Gujarat had begun shipping DRAM and NAND memory products to customers globally.
- [7]
"Earlier this year, we began commercial production at Sanand," Micron CEO Sanjay Mehrotra said.
- [8]
Micron expects to assemble and test tens of millions of chips at the Sanand plant this year and to scale that to hundreds of millions next year.
- [9]
Modi said: "And today, when supply chains are being weaponised, its importance becomes much greater."
- [10]
Infineon Technologies now has more than 2,800 employees in India.
- [11]
Modi said India had entered the second phase of its semiconductor journey, moving beyond policy announcements and construction of plants towards commercial production of chips.
- [12]
Infineon CEO Jochen Hanebeck called India a "market of tremendous importance" and pointed to his firm increasing hiring in India by 28%.
- [13]
Twelve semiconductor projects were approved under the first phase of the India Semiconductor Mission, spanning fabrication, packaging and other parts of the chip value chain, and three have already started commercial production.
- [14]
India's semiconductor demand is projected to reach $110 billion by FY30 and exceed $200 billion by FY35, while domestic manufacturing remains at a nascent stage.
- [15]
Lam Research announced plans to invest around Rs 10,000 crore in India over the next several years to establish its first silicon-component manufacturing facility in the country and expand its advanced R&D operations, covering silicon ingot production and processing for advanced semiconductor technologies.
- [16]
Lam Research COO Sesha Varadarajan said his firm would be investing Rs 10,000 crore "to establish our first silicon component manufacturing facility in the country".
- [17]
Varadarajan said "we are increasing our partnerships with suppliers across India in specialised materials, precision components, gases, chemicals, metrology and manufacturing services".
- [18]
Mehrotra said Micron's Indian teams have contributed to more than 3,700 patents, inventions and disclosures.
- [19]
Global industry body SEMI's CEO Ajit Manocha estimated that the semiconductor industry would cross $1.3 trillion this year, and $2 trillion by 2030.
- [20]
IT Minister Ashwini Vaishnaw said: "We will be targeting one lakh people to be trained, who will straight away be employed in the factories which are coming up in India, and it will be a global pool of talent which will be available."
- [21]
India spent almost $150 billion on semiconductor product imports between FY17 and FY25, imports grew at a CAGR of 23% over that period, and if the trend continues annual imports could reach $240 billion by 2035.
- [22]
Neither the Indian Express nor The Hindu account of Modi's speech names Taiwan or China; both report the pitch in terms of trusted locations and weaponised supply chains.
- [23]
Mehrotra said "Our current production capacity already exceeds the memory required for India's entire laptop market".
- [24]
Wayne Allan, an executive at ASML, said that "India will become increasingly important globally" as the chip ecosystem develops further.
- [25]
"I urge industry leaders to lead R&D in the country," Modi said, seeking greater participation from private companies in research and development.
- [26]
Lam Research's Rs 10,000 crore commitment is about 7.9 per cent of the Rs 1.27 lakh crore second-phase outlay.
- [27]
India's projected $110 billion of FY30 demand is roughly 5.5 per cent of SEMI's $2 trillion 2030 industry estimate.
- [28]
Twenty-three per cent compounded over ten years multiplies a base by 7.93, so the $240 billion 2035 import projection implies an FY25 import run-rate near $30 billion.
- [29]
Almost $150 billion of semiconductor imports across the nine fiscal years FY17 to FY25 averages about $16.7 billion a year.
- [30]
Trend imports of $240 billion by 2035 are at or above the projected domestic market of more than $200 billion by FY35, so domestic output has to displace imports rather than absorb demand growth alone.
- [31]
The Hindu reported that Applied Materials committed to invest $5 billion over the coming five years, to expand their R&D centre and supply chain.
- [32]
The two published accounts of Applied Materials' $5 billion imply either about $500 million a year over ten years or about $1 billion a year over five.
Sources
3 independent publishers whose own reporting we read for this story.
- indianexpress.comWorld needs new, trusted chip bases, India ready for it: PM Modi | Business News - The Indian Express
1 article · September 17, 2026
- livemint.comSemicon India 2026: PM Modi says India taking steps to become preferred Semiconductor manufacturing | Mint
1 article · September 17, 2026
- thehindu.comSemicon India 2026: India’s semiconductor ecosystem expanding; opening new opportunities, says Modi - The Hindu
1 article · September 17, 2026
Topics and entities
Topics
- India Semiconductor Mission
- Foundational semiconductors and supply-chain exposure
- Semiconductor Equipment
Entities
- Applied Materials
- Micron Technology Inc.
- Tata Electronics
- Ashwini Vaishnaw
- Infineon Technologies
- Lam Research Corp.
- Narendra Modi
- ASML