Chip Dreams Need the Full Stack: Why India's $100 Billion Semiconductor Goal Requires More Than Just Fabs

Shrikant Soman
24 hours ago
4 min read

Chip Dreams Need the Full Stack: Why India's $100 Billion Semiconductor Goal Requires More Than Just Fabs

By Shrikant Soman

Beyond the Fab: Why India Must Prioritize Design Sovereignty in the Chip Race.
The $100 Billion Question: India's Strategy to Build a 'Full-Stack' Semiconductor Powerhouse.
From Talent to Product: Architecting India’s Global Semiconductor Ecosystem.
The Digital Diamond: Unleashing India’s Design Prowess to Fuel Domestic Chip Manufacturing.
Chip Dreams, Infrastructure Reality: The Full-Stack Strategy India Needs Now.
The NVIDIA Playbook: Why India Needs Systems Companies, Not Just Semiconductor Fabs.
India's Semiconductor Sovereign Strategy: Shifting Focus from Silicon to Product IP.

India's semiconductor dream—aimed at building a $100 billion ecosystem—will fail if it chases only the capital-intensive 'fab' part of the supply chain. Experts urge an immediate shift to a 'full stack' approach: one that aggressively prioritizes indigenous product development, design Intellectual Property (IP), and the creation of systems companies like AMD or NVIDIA. This strategy leverages India's existing 20% share of global design talent while building the sustained, domestic demand necessary to make massive manufacturing investments viable.

The Imperative: Moving Beyond the Fab Fantasy

India's renewed push into semiconductors, spearheaded by the India Semiconductor Mission (ISM), aims to position the country as a crucial, trusted partner in the global supply chain. The government has committed substantial fiscal support, offering up to 50% of the project cost for approved semiconductor and display fabrication units (fabs).

However, the image's core thesis—"Chip Dreams need full stack"—highlights a critical flaw in prioritizing only the manufacturing aspect (fabs). As semiconductor veteran Raja Manickam and others argue, true and lasting value lies not just in manufacturing the chips, but in productizing them—figuring out how to put multiple IPs together to create globally recognizable brands and final products.

This holistic, full stack approach encompasses:

IP and Chip Design (India’s strength)
Product Development (India’s gap)
Manufacturing (Fabs and ATMPs)
Final System/Product (The end customer)

Indian Facts and Figures on the Ecosystem

To understand the magnitude of the challenge, we must acknowledge India's current position:

Market Size & Consumption: India's semiconductor market, valued at $52 billion in 2024-25, is projected to exceed $100 billion by 2030. This enormous domestic demand—driven by smartphones, EVs, and digital infrastructure—is the engine that must fuel the ecosystem.

Design Talent: India currently possesses approximately 20% of the world's semiconductor design talent. This strength in Electronic Design Automation (EDA), core IP, and chip design is the country's most significant competitive advantage.

Import Dependence: Despite its design prowess, India still imports nearly 90–95% of its semiconductor chips and raw materials. This heavy reliance on foreign supply chains makes the economy vulnerable to geopolitical disruptions.

Challenges and the Full-Stack Solutions

The current strategy faces multiple hurdles that a full-stack approach is designed to solve:

1. Challenge: High Capital Costs & Execution

Fact: Setting up a new fabrication unit can cost between $5 billion and $7 billion. Substantial capital funds and technology tie-up complexities saw earlier proposals fail to progress beyond memoranda.

Full-Stack Solution: Focus first on low-cost, high-volume products (e.g., less than $5 chips for power devices and automotive components) that India can master and integrate into domestic products. This ensures the creation of guaranteed domestic demand to make the future mega-fabs economically viable.

2. Challenge: Infrastructure and Supply Chain Gaps

Fact: Fabs require specialized infrastructure: uninterrupted, high-quality power supply and massive quantities of ultra-pure water. India lacks domestic sources for key materials like silicon wafers and specialty chemicals.

Full-Stack Solution: Experts suggest that instead of centralizing investment in one mega-fab, India could build smaller, decentralized fabs or specialized Assembly, Testing, Marking, and Packaging (ATMP) units across the country, making them locally managed and tailored to regional needs.

3. Challenge: The Talent Mismatch

Fact: Although India has deep design talent, there is a shortage of specialized talent for manufacturing and high-end VLSI (Very Large Scale Integration) experts.

Full-Stack Solution: Government and large corporations must actively adopt small, innovative product startups and help them scale with capital and experienced talent. This strategy nurtures the entire value chain, from design to productization, strengthening the overall ecosystem.

Global Analogy: The NVIDIA Example

Globally recognized chip giants like NVIDIA demonstrate the full-stack philosophy. Their success wasn't built on owning the most advanced fabs; it was built on creating product brands (e.g., the GPUs for AI) and designing a system approach (like the CUDA platform) that utilized chips to enable products. They made the most money out of the entire value chain by controlling the product and the market.

For India to succeed, the focus must shift from merely providing incentives for global companies to set up shop to fostering indigenous product companies that can build global brands and utilize the future domestic fabs. This ecosystem-driven approach is acknowledged by the ISM 2.0 plan.

The following video provides an in-depth conversation with Raja Manickam on the challenges and vision for India's semiconductor mission:

Nvidia's Success, Chip Race, India's Semiconductor Mission, & Hardware Vs Software | Raja Manickam.

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