The Execution Paradox: Why Strategy Won’t Save India’s Chip Dreams

In a country where grand plans are often met with skepticism, the Indian government’s semiconductor ambitions have been a rare exception. For years, policymakers and industry leaders have touted the nation’s vision to become a chip-making powerhouse, borrowing strategies from Asia’s top economies.

However, beneath this carefully crafted plan lies a more complex reality – one where execution is proving to be the biggest hurdle. A recent report by Equirus Securities shines a light on the challenges facing India’s semiconductor industry. Despite its strong pool of chip designers, the country still relies heavily on imported equipment and raw materials, with over 90% of its semiconductor manufacturing gear coming from abroad.

This problem speaks to deeper issues with innovation, talent development, and industry maturity. One of the report’s most striking findings is the disconnect between India’s semiconductor strategy and its execution capabilities. On paper, the country’s plan looks solid: leveraging Taiwan’s research prowess, Malaysia’s foreign direct investment, South Korea’s domestic champions, and Singapore’s capital discipline to create a robust ecosystem.

However, when it comes down to actual implementation, the picture is murkier. The report notes that India boasts an impressive number of chip designers – nearly 300,000 strong, representing one-fifth of the global semiconductor design workforce. However, this expertise is not being matched with manufacturing-specific skills, such as process engineers, metrology specialists, and yield engineers.

Producing 85,000 industry-ready engineers by 2027 will be a stretch, even if it’s achievable. The example of Micron’s Sanand ATMP facility is often cited as a success story – but it’s also a cautionary tale. While the facility became operational with around 2,000 trained workers within three years of construction, this was achieved with significant investment and support from the parent company.

The question remains: can India replicate this model on its own? The report highlights several gaps in India’s semiconductor policy that need addressing – stronger incentives for chip design, a robust equipment and materials ecosystem, and limited prospects for manufacturing chips below 28nm in the near term. These are not minor issues; they speak to deeper structural problems within the industry.

Perhaps the most striking aspect of this report is its acknowledgment of the country’s dependence on imports. With over 90% of chip-making equipment and between 85-90% of specialty chemicals and electronic-grade gases coming from abroad, India’s semiconductor ambitions are being held hostage by external factors. This raises uncomfortable questions about the nation’s industrial maturity – can it truly become a self-sufficient player in the global semiconductor market?

The Indian government has taken bold steps to promote its semiconductor industry, but execution is where the rubber meets the road. As the country navigates these challenges, it would do well to remember that strategy alone will not save its chip dreams. Execution is not just about meeting targets; it’s about building an ecosystem that can sustain itself over time.

The stakes are high – and so too are the consequences of failure. If India fails to address these execution gaps, it risks becoming a mere also-ran in the global semiconductor market. The clock is ticking, and it’s time for policymakers and industry leaders to deliver on their promises.