US semiconductor manufacturing equipment specialist Applied Materials announced on September 17 a plan to invest $5 billion in India over the next decade under the India Vision 2035 initiative, supporting New Delhi’s efforts to build an integrated domestic chip ecosystem.
Investment in research and development and supply chains
Applied Materials’ initiative focuses on three main areas: expanding research and development, accelerating the growth of the domestic semiconductor ecosystem and developing human capital. The company plans to establish an advanced semiconductor research campus spanning 588 dunams, while expanding its engineering capabilities and network of local suppliers.
The company aims to increase the capacity of its supply chain in India tenfold by 2035. The plan does not include building a large-scale chip manufacturing plant, as Applied Materials focuses on supplying the equipment and technologies used in semiconductor plants.
India has a broad base in chip design and engineering software. An Intel executive said at the Semicon India 2026 exhibition that the country accounts for about 20% of the global workforce in chip design and very-large-scale integration, with more than 85,000 local specialists in the field.
The Indian government has expanded its policy to include manufacturing, packaging, testing, materials, gases and equipment. In July, it approved the Semicon 2.0 programme with a budget of 1.275 trillion rupees (about $15.3 billion), focusing on chip design and manufacturing, advanced packaging and the development of other parts of the ecosystem.
Artificial intelligence boosts chip demand
India’s plans coincide with growing demand for the computing capacity and memory needed for artificial intelligence, increasing the need for advanced processors, high-bandwidth memory and advanced packaging technologies. Applied Materials believes the expansion of AI infrastructure is reshaping the semiconductor design and manufacturing landscape.
The Indian government expects the country’s semiconductor consumption to rise to about $110 billion by 2030, from about $45 billion to $50 billion in 2025, strengthening incentives to build domestic capacity near one of the world’s largest electronics markets.
Trade and geopolitical tensions, along with US and Chinese restrictions on chip technologies, are pushing companies and governments to diversify production locations, as a large share of advanced manufacturing remains concentrated in a limited number of countries and regions. The Washington-based Center for Strategic and International Studies says India is seeking to capitalize on these shifts by strengthening its manufacturing, packaging and pre-competitive research capabilities, drawing on its pool of talent in science, engineering and technology.
New Delhi is linking its chip strategy to its artificial intelligence plans, working to expand domestic semiconductor and computing infrastructure capabilities while continuing to rely on global supply chains for some components, including graphics processing units used in advanced computing.
Challenges in moving to large-scale production
Despite the announced investments, India remains in the process of building heavy manufacturing capacity. As of September, it had not produced chips at a large integrated plant, while Tata Electronics’ flagship project in Gujarat, valued at about $10 billion, was roughly two years behind schedule.
In addition to financing, chip manufacturing requires specialized expertise, stable supplies of water and power, precise supply chains and highly complex equipment, as well as suppliers capable of meeting industry standards and years of operating experience. India’s progress will depend on turning announced projects into stable, large-scale production and linking its design capabilities to manufacturing, packaging and global supply chains.
