As India shifts from being a chip consumer to a chip producer, the battle for semiconductor supremacy is no longer confined to the multinational and regional giants: the upstream end is awash with activity.
India Semiconductor materials market was valued at USD 5.0 Billion in 2024. With the Indian government providing huge incentives for making semiconductor in India and due to global supply chain diversification, the expectation is to reach USD 8.1 Billion in market size by 2033 at a 5.22% CAGR between 2024 and 2033.
This blog assesses the key drivers, emerging trends, and regional hotspots that are shaping this structural shift in the Indian technology ecosystem.
The Structural Shift: From Import to Indigenization
For decades, India has relied on imported semiconductors. However, post-COVID-19, a global semiconductor supply chain “China Plus One” strategy and the Semicon India Program of the Indian government have enabled a domestic semiconductor ecosystem.
The market is now seeing a great demand for material in two key areas:
1. Fabrication: Such as silicon wafers, photoresists, wet chemicals and electronic gases needed in front-end wafer fabrication.
2. Packaging materials such as leadframes, organic substrates, and bonding wires used in Assembly, Testing, Marking, and Packaging (ATMP).
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Key Growth Drivers
1. Government Incentive Schemes (PLI)
The driving force behind this growth is a Production Linked Incentive (PLI) scheme with an outlay of more than $10 billion that has attracted global players to establish manufacturing units in India. The scheme lowers the high CAPEX barrier faced by the material suppliers to set up purification and blending plants locally.
2. The “China Plus One” Strategy
The geopolitical diversification of semiconductor supply chains from China opens opportunities for countries such as India with a stable democracy, improving infrastructure and a large base of engineers and IT professionals.
3. Exploding Electronics Consumption
This upstream demand is driven domestically to support more smartphones, laptops, and Internet of things (IoT) devices. In turn, supply chains for materials must be closer to the end customer to keep lead time and import costs in check.
Top Emerging Trends in 2025
- Compound Semiconductor Adoption: Silicon Carbide (SiC) and Gallium Nitride (GaN) are of particular interest, largely due to the high power levels that can be achieved and their application within the booming Electric Vehicle (EV) market and to renewable energy systems, where high efficiencies are required.
- Localization of Ultra-Pure Chemicals: Global chemical companies are investing also in local chemical production facilities. Moving dangerous and very pure chemicals may be costly and unsafe. Localizing chemical production helps prevent disruptions to fabs like Tata’s.
- Advanced Packaging (2.5D/3D): In light of ever-smaller chip sizes and increasing chip performance, demand for advanced packaging technology such as specially developed encapsulation resins and advanced substrates is growing dramatically.
Regional Hotspots: Where is the Action?
The report highlights a distinct regional divide based on the type of semiconductor activity:
- South India (Bengaluru & Tamil Nadu): It is the current stronghold, with established Bengaluru as the electronics and R&D hub of India.
- West India (Gujarat): The fastest growing area within GSEZ. Micron Technology has established an Advanced testing and packaging (ATMP) plant at Sanand, and Tata Electronics is establishing India’s first commercial silicon fabrication plant at Dholera. Gujarat is becoming the “Silicon Valley of the East”.
- North India (Noida/Greater Noida): Continues to expand into consumer electronics manufacturing, increasing demand in packaging materials.
Recent Industry Developments
The market is buzzing with high-value investments that directly impact material demand:
- Micron Technology’s Investment: The establishment of the ATMP facility in Gujarat has triggered immediate demand for packaging materials like substrates and bonding wires.
- Tata Electronics in Dholera: The commencement of India’s first Fab signals a long-term, high-volume demand spike for wafer fabrication chemicals, gases, and silicon wafers.
Conclusion
The India semiconductor materials market is at an inflection point. It offers a lucrative opportunity for investors and stakeholders to enter an industry that is foundational to India’s digital future. Whether it is supplying high-purity gases for fabrication or advanced substrates for packaging, the next decade promises robust growth and innovation.
Ready to dive deeper? To understand the granular segmentation of Fabrication vs. Packaging materials and to view the complete forecast data, read the full IMARC Group report.
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