India's Semiconductor Gamble: Is the Leap from Assembly to Chip Design Feasible?

I noticed an interesting detail: The incentive plan announced by the Indian government this time is not solely targeted at smartphone final assembly, but lists "expanding semiconductor manufacturing" as a parallel goal. This may imply that New Delhi has realized that subsidies for the assembly stage alone make it difficult to truly challenge China's dominance in smartphone manufacturing.

Looking at the value distribution across the industrial chain, in the cost structure of smartphones, chipsets (including baseband and application processors) account for approximately 30%-40%, core components like screens, storage, and camera modules account for another 40%-50%, while the value-added from the assembly stage is typically only 5%-10%. Over the past decade, India successfully attracted contract manufacturers like Foxconn, Wistron, and Pegatron through the "Production Linked Incentive" (PLI) scheme, achieving about $15 billion in smartphone exports (2025 data). However, the core components within those exports—especially chips and display panels—are almost entirely imported. This means India's current role in the global supply chain is closer to an "assembly workshop" than a "manufacturing center."

Stage	Value Share	India's Current Capability	China's Current Capability
Chip Design	15%-20%	Weak (few fabless firms)	Strong (HiSilicon, Unigroup, etc.)
Wafer Manufacturing	25%-30%	Almost blank (mature nodes only)	Mass production below 14nm, 7nm in R&D
Packaging & Testing	10%-15%	Limited (e.g., Tessolve)	Top 3 globally (JCET, Tongfu)
Screen/Modules	20%-25%	Relies on imports	BOE, CSOT
Final Assembly	5%-10%	Strong (~200 million units/year)	Largest globally (~800 million units/year)

India's newly proposed "multi-billion dollar" incentives, combined with the previously approved $10 billion semiconductor incentive plan, bring the total investment scale to over $20 billion. It is worth noting, however, that semiconductor manufacturing is a typical heavy-asset, long-cycle, high-barrier industry. TSMC's single 3nm fab costs over $20 billion to invest in and takes up to 5 years to build. Currently, only three wafer fab projects in India have been approved (totaling ~$15 billion in investment), and all are focused on mature nodes (28nm and above). For the 7nm, 5nm, or even more advanced chips required by smartphones, India currently has absolutely no capability to produce them.

From an academic perspective, is this direction good for publishing papers? For computer vision researchers, India's semiconductor policy won't directly change our topic selection, but it indirectly affects upstream IT infrastructure investment in the supply chain. For example, if India can manufacture some sensor chips locally (such as camera ISPs, ToF modules), it might lower procurement costs for Chinese OEMs, thereby influencing domestic algorithm optimization directions. However, India's current global share of semiconductor manufacturing patents is less than 1%, far below China's 12% and the US/Japan's 40%+. Reviewer comments often require experiments to run on stable hardware platforms, and there is currently no public data supporting the yield and stability of indigenous Indian chips, making them unlikely to become mainstream research platforms in the short term.

Given tight lab funding, I am more concerned about policy sustainability. Looking back at China's rise in the semiconductor industry, government subsidies, market pull, and talent return are all indispensable. Although India has a huge domestic market (about 300 million smartphone demands per year) and a large pool of English-speaking engineering talent, problems like weak infrastructure, unstable power supply, and inefficient bureaucracy have persisted for a long time. In 2017, India launched the "Smart Cities Mission," investing over $15 billion, but the final results were limited. Whether this semiconductor stimulus can avoid repeating past mistakes remains to be seen.

• Talent Reserve: India has about 50,000 semiconductor engineers, compared to about 300,000 in China (including design, manufacturing, and packaging/testing).
• Research Output: Annual publications in India's semiconductor field are around 800 papers, compared to about 12,000 papers in China (2024 statistics).
• Policy Stability: India has launched four large-scale manufacturing incentive plans in the past decade, two of which had budgets cut midway.

A clear trend prediction: India will form certain substitutes in mature node chips (like power management, driver ICs) and some passive components within the next 5-8 years, but it will take at least 10 years to shake China's dominant position in core smartphone chips (AP, baseband). The real contest happens in 2028-2030; if India can achieve mass production at the 28nm node by then and combine it with its software service outsourcing advantages, it might disrupt China's existing supply chain landscape in certain niche areas (like IoT device chips, automotive-grade chips). For domestic researchers, I recommend paying attention to India's progress in heterogeneous integration packaging and Chiplet technology, as this could be their angle for overtaking on the curve.

![](https://bbs-physixfrontier-com-data.oss-cn-hongkong.

Original link: https://techcrunch.com/2026/07/15/india-bets-billions-on-breaking-chinas-grip-on-smartphone-manufacturing/