India’s ambitions to become a semiconductor superpower have been facing as much turbulence as traction. From collaborations to other struggles, the country’s chipmaking story is still finding its footing, and not without external friction.

A recent incident involves Kaynes Semicon, a subsidiary of Kaynes Technology India, and Taiwan-based Aptos Technology, a subsidiary of photomask giant Taiwan Mask Corporation (TMC). 

The two had signed a definitive agreement in 2024 to build packaging and testing capabilities in India and propagate a knowledge transfer. The deal, however, unravelled before it could even take off. Contrary to earlier reports by media outlet Digitimes on Kaynes failing to uphold its commitments, the collapse of the partnership was triggered by Aptos’s internal crisis. Raghu Panicker, CEO of Kaynes Semicon, told AIM that Aptos was “already in financial distress” and embroiled in a legal battle over signing conflicting deals.

“While we had a definitive agreement, they had also signed an MoU with another company. It became a legal issue. We told them very clearly, once you’re cleared by the Indian courts, we’re ready to engage. But by then, they had lost customers, revenue, and couldn’t fund capex,” Panicker said.

Despite announcing the partnership on stock exchanges in both India and Taiwan, the deal never moved past the paperwork. “It was a breach of trust,” Panicker said. “They were in an exclusivity window with another company while signing with us.”

Hurdles with Big Players

India has attempted to position itself as the next major chip destination, offering financial incentives, infrastructure support, and a robust political narrative emphasising tech independence. However, top-tier semiconductor players have reportedly stayed cautious.

In 2022, Foxconn and Vedanta announced a high-profile joint venture to build semiconductor fabrication facilities (fabs) in India. That collapsed within a year due to subsidy delays and disagreements over plant strategy. 

More recently, Foxconn reentered the space through a packaging and testing project with India’s HCL Group under its build-operate-local (BOL) model, a structure that minimises deeper capital risk.

Powerchip, another Taiwanese player, signed a contract with the Tata Group to help design and construct India’s first 12-inch wafer fab. However, Powerchip has steered clear of operations and long-term commitments, acting only as a technology provider. Company chair Huang Chongren has openly stated that large Taiwanese chipmakers are hesitant to set up operations in India.

According to insiders, one of the few reasons Powerchip agreed to engage in India’s semiconductor plan was the direct involvement of then-Taiwanese President Tsai Ing-wen. Even then, the partnership was carefully scoped, limiting responsibility to factory design and employee training.

Other major players, including Taiwan Semiconductor Manufacturing Company (TSMC), were approached by Indian authorities but reportedly declined to involve themselves beyond basic consulting. TSMC offered to provide process knowledge and technology transfer on a contractual basis but showed no interest in running operations or managing supply chains on Indian soil.

Panicker, however, is optimistic. He said that Kaynes is currently in talks with five Taiwanese firms for assembly, testing, and packaging partnerships. “The question is no longer if they’ll come, but when,” he said.

Kaynes to Pilot by August-End

The Indian government has been pushing to reduce its dependence on foreign-made chips and attract top global players to invest in local manufacturing. However, the exits of TSMC, United Microelectronics Corporation (UMC), and World Advanced, along with the conservative stance of firms like Powerchip, indicate that the road ahead remains uneven.

As for Kaynes, after the incident, rather than stalling, it swiftly pivoted to new partners, signing an agreement with Japan’s AOI Electronics. It expanded knowledge transfer initiatives to Japan, Penang, and Taiwan, with over 30 employees trained overseas as part of this recalibration.

“Our project cannot stop because somebody broke the trust,” Panicker stressed. “We went ahead, put up the pilot line. As we speak, it’s up and running.” In fact, Kaynes is on track to deliver its first chip from the Sanand Plant by the end of August 2025, marking a critical milestone in India’s semiconductor journey.

State Support, Private Responsibility

As per multiple players in the country, government support is no longer the bottleneck. Panicker revealed that the electronics and IT ministry (MeitY) and the India Semiconductor Mission (ISM) have been proactive, from site visits to monthly reviews.

“We’ve received tremendous support, like approvals, visits, and constant engagement from both central and state authorities. Now the ball is in the industry’s court.”

Adding to the conversation, Rajiv Mody, owner of Sasken Technologies, told AIM, “I think the government has done quite well. They’ve made the subsidies available and created the ecosystem. Now it’s in the hands of the private sector to say, ‘Okay, how do we leverage it and go forward?’”

This reflects their stances on the foundational support from the government, like subsidies and ecosystem-building. Yet, India must tackle its structural gaps, from cleanroom construction and supply chain localisation to pool of experienced engineers and ecosystem maturity. These are not short-term projects, and they demand patience and consistency.

Can the Dream Be Rescued?

While India’s semiconductor ambitions are not without merit, recurring partnership failures reveal deeper structural issues. Key among them are the lack of technical expertise in areas such as wafer processing, testing, and silicon photonics, as well as policy inconsistencies that have hindered the rollout of large-scale industrial projects.

The Indian government’s Production Linked Incentive (PLI) scheme has been a key draw for some players, but it continues to attract the big players, designers and manufacturers in the industry. 

While India’s domestic startups and contract manufacturers are hopeful that the country can still build a viable ecosystem, it requires patient capital, international mentoring, and realistic expectations. 

This raises a question of whether India is fully utilising its most potent resource: is there enough talent, knowledge and technology transfer taking place? 

The post What’s Stopping India From Becoming a Semiconductor Superpower? appeared first on Analytics India Magazine.