AI Powers Trillion-Dollar Semiconductor Boom: Can India Evolve From Design Leader To Manufacturing Giant?

Bengaluru: The sudden boom in artificial intelligence (AI) technology is driving a new cycle of growth in the global semiconductor industry. According to experts at COSEIn 2026, India finds itself at a crossroads where it can emerge as a hub for semiconductor manufacturing and innovation, in addition to being a leader in semiconductor design. However, realising this potential will depend on progress in chip manufacturing, advanced packaging, energy infrastructure, research, and skilled talent.

"India is home to almost 20 per cent of the world’s semiconductor design engineers, and has more than 125 semiconductor design firms, research, and development centres, making India the world's second-largest semiconductor design ecosystem after the US. The coming growth of India will be based on design-led innovations due to strong collaboration between research institutions, industries, startups, and government," said Deepak Agarwal, Corporate Vice President, AMD at COSEIn 2026 (Conference on Semiconductor Ecosystem in India), hosted by the Centre for Nano Science and Engineering (CeNSE), Indian Institute of Science (IISc), Bengaluru.

AI Growth Fuels New Demands on Semiconductor Innovation

On the future of semiconductors and AI, Agarwal said that every major technology trend, from healthcare and cloud computing to mobility and defence, is built on semiconductor chips. Advances in processor architectures, memory, networking, and parallel computing have enabled AI training and deployment at scale; however, the rapid growth of AI is now driving the need for further semiconductor innovation.

Highlighting the growing energy challenge, Agarwal noted that India’s peak power demand stands at about 260 GW. In comparison, global data centres consume around 132 GW, with AI infrastructure alone requiring an additional 50–60 GW. As AI adoption expands, optimising power consumption across the technology stack through better system and chip design will become increasingly important. He stressed that addressing future AI power requirements will require coordinated action across the ecosystem.

Describing India as a design and innovation powerhouse, Agarwal said innovation must begin with chip design, which now determines performance, power efficiency, scalability, and cost. No single chip can handle every workload. Future progress will come from chips designed for specific tasks and computing systems that combine different types of chips.

From AI to Trillion-Dollar Growth: The Semiconductor Opportunity

Suraj Rangarajan, Principal Technologist, Applied Materials India, said that AI is changing industries fast, and in the coming years, the demand will be more for semiconductors. Rangarajan and Agarwal pointed out the increased growth in the semiconductor industry due to companies using AI technology worldwide. They said that at a value of roughly $600 billion in 2024, the industry has already exceeded the $1 trillion mark, reaching a point which was anticipated to be achieved in 2030.

Experts say that India has the second-largest chip design ecosystem in the world (Getty Images)

Rangarajan noted that India’s key challenge lies in the “missing middle” of the semiconductor value chain, particularly in equipment making, chip fabrication, and device production. Beyond manufacturing, he highlighted a major opportunity for India to become a global hub for data centres, which could be worth a $250-300 billion market. However, energy availability is the biggest constraint.

He stressed that India could become a participant in the global ecosystem of semiconductors. This is possible only when India creates a strong energy infrastructure and energy-efficient computing technologies. Also, India needs to foster an environment where innovation and deep-tech research, along with semiconductor technologies, become globally competitive. With respect to the increased demands on energy due to the use of AI, he noted that an AI-driven search consumes 10 times more energy compared to a typical search. The world could encounter energy shortages that might hinder the development of AI until 2035, noted Rangrajan.

According to Rangarajan, capital is not the primary challenge for India’s semiconductor ambitions. Rather, structural issues like deep tech challenges, prolonged research & development processes, costly infrastructure with lab access, and a limited number of skilled workers need immediate consideration.

While highlighting the importance of semiconductor yield management and manufacturing competitiveness, he talked about the necessity of national collaboration infrastructure and innovation centres.

From Vision to Ecosystem: India’s Semiconductor Journey

In an interview with ETV Bharat, Prof. Rudra Pratap, Founding Chairperson of CeNSE at IISc, said that while India remains at an early stage in building a globally competitive semiconductor ecosystem, it has already made meaningful progress toward the milestones needed over the next decade.

“We are perhaps at three out of 10,” he said. “What is most encouraging is that, for the first time, a semiconductor ecosystem is beginning to take shape in the country.”

Recalling the origins of this effort, he said that the journey began around 2002, when researchers at CeNSE, IISc Bengaluru and IIT Bombay started exploring ways to build a semiconductor ecosystem in India. Their focus was on creating awareness within academic and research institutions, the skills required to do research in it, and establishing advanced laboratories to train students in the semiconductor field.

Left: Chief Guest, Shivkumar Kalyanaraman, CEO, ANRF | Right: Ambarish Ghosh, Chair, CeNSE (CenSE/ IISc)

He recalled that despite India graduating hundreds of thousands of electronics students every year, most had no exposure to semiconductor technology. Seeing this gap, researchers pushed for dedicated research and training facilities in semiconductors. This was achieved in 2004 when the Ministry of Electronics and Information Technology (MeitY) sanctioned the proposal of IISc Bengaluru and IIT Bombay for setting up advanced semiconductor facilities worth Rs 50 crores each. Those early investments helped build the ecosystem that is now growing, he added.

Targeting High-Opportunity Segments Beyond Cutting-Edge Chips

Discussing which particular segments of the semiconductor value chain India should consider in order to have a sustainable competitive advantage, Prof. Pratap stated that India must focus on the vast scope beyond cutting-edge processor nodes, which find application in GPUs and smartphones. He highlighted mature-node semiconductors in automobile electronics, railways, drones, and industrial use as major segments.

He also identified RF technologies and compound semiconductors, such as gallium nitride and silicon carbide, used in communications, radar systems, power electronics, EVs, chargers and UPS systems, as segments where India can build a strong competitive advantage. Except for the most advanced processor chips, he believes most semiconductor markets are within India’s reach.

Prof. Rudra Pratap also highlighted India’s growing semiconductor expertise across design, manufacturing, and systems, stressing that mastering hardware-software co-design and AI integration will be key to becoming a global powerhouse.

Shyam Raghunathan, Head of the Micron India Research Centre, said the world’s leading semiconductor R&D ecosystems are built on strong industry-university partnerships, industry-led research priorities and sustained government support. Even though India has more than 100 semiconductor-focused GCCs, he mentioned that most of these continue to focus on design execution, while university-led research continues to be limited in scale.

To improve the ecosystem, he suggested increased spending on research and development in academia, collaboration between industry and academia, development of cutting-edge intellectual property (IP) in India, and the setting up of government-led consortia for mission-oriented innovation. Besides this, he emphasised the need to have industrial anchors because India needed to develop certain segments, such as advanced packaging and semiconductor equipment development.

Market Access and Talent: The Missing Links in India’s Semiconductor Journey

The biggest challenge for India to achieve commercial-scale semiconductor manufacturing, Prof. Pratap emphasised, is market access, which remains the biggest bottleneck for India’s semiconductor industry. He noted that successful technology ecosystems worldwide, particularly in the US and China, have been supported by strong government procurement and assured demand. India, by contrast, has often struggled to create domestic markets for indigenous technologies. He argued that guaranteeing demand for locally manufactured chips and increasing indigenous content requirements in government procurement could significantly accelerate the growth of India’s semiconductor ecosystem over the next decade.

Similarly, industry experts cautioned that while India has a strong talent base within its academic and research institutions, there remains a shortage of professionals with hands-on experience in semiconductor fabrication and manufacturing. Experts agreed that the opportunity for India is huge. However, it would not be easy to convert such an opportunity into success due to the need to bridge some major gaps across design, manufacturing, innovation and market adoption.