India is fast becoming a significant player in the global semiconductor supply chain, alongside Southeast Asian nations like Malaysia and Vietnam. A combination of geopolitical shifts, domestic policy support, and global demand for chip alternatives beyond China has positioned India at the heart of an industry in transformation.
While traditional leaders like Taiwan, South Korea, and China still dominate the global chip sector, India and Southeast Asia are catching up quickly, focusing on both chip design and manufacturing infrastructure.
India’s semiconductor market is forecast to grow from $38 billion in 2023 to $50 billion in 2025, with ambitious targets of hitting $100–110 billion by 2030.
Policy-led chip push and rising investor confidence
India’s growth is being powered by government-backed schemes such as the Production Linked Incentive (PLI) for electronics, and the Electronics Component Manufacturing Scheme, which incentivize domestic production and help attract global players.
Commercial manufacturing of semiconductors is expected to begin by late 2025, with $18 billion in investment across 10 approved projects.
India is also improving its global positioning by investing in chip fabrication (fabs), packaging, testing, and embedded software, making it a strong contender for supply chain diversification in light of global tensions.
For MSMEs, this opens up opportunities in ancillary manufacturing, chip packaging services, precision tooling, and supply of electronic components to larger fabs.
Southeast Asia strengthens back-end chip operations
While India focuses on end-to-end production, countries like Malaysia, Vietnam, and Thailand are becoming hubs for back-end chip operations such as assembly, testing, and packaging (ATP). Malaysia’s Penang state is now a hotspot for AI chip assembly, backed by strong government support and skilled talent.
These nations are leveraging their cost advantages, export focus, and favourable policies to build resilient supply chains, often collaborating with India in regional initiatives.
Challenges remain: Talent, infrastructure, and trade risks
Despite the momentum, experts caution that India and Southeast Asia must address key challenges like:
-
Skilled talent shortages in chip design and advanced manufacturing
-
Rising wage costs and the need for automation
-
Infrastructure bottlenecks, especially in Tier-2 industrial zones
-
Exposure to global trade tensions that could disrupt raw material flows
India must continue to invest in education, research & development (R&D), and supply chain security to sustain long-term competitiveness.
A regional opportunity for MSMEs in electronics and semiconductors
For Indian MSMEs in the electronics value chain, this semiconductor boom offers a chance to supply to global majors, collaborate on design services, or co-manufacture critical components.
As Asia becomes the global hub for chips, India’s MSMEs can play a catalytic role — not just in supporting production, but in co-creating value with global partners.