The India strategy to diversify its semiconductor landscape advances steadily toward so-called second-tier cities. According to a report from Quess Corp Limited, early investors in hubs such as Ahmedabad (ATMP), Mohali (design), and Thiruvananthapuram (embedded systems) will benefit from public incentives and cost advantages, especially as the traditional major hubs—Bangalore and Hyderabad—begin to show signs of saturation and talent retention pressures.
New plants and projects under the India Semiconductor Mission
The central government recently approved four additional projects under the India Semiconductor Mission (ISM): two in Odisha, one in Andhra Pradesh, and another in Punjab. Collectively, these will involve an investment of nearly ₹4,600 crore and create more than 2,000 specialized jobs.
With these new facilities, ISM has now approved 10 projects across six states, with an accumulated investment of around ₹1.6 lakh crore and a promise of 29,000 new jobs.
Expanding market
The report projects that the Indian semiconductor market, valued at $54.3 billion in 2025, will reach $135 billion by 2030, with a compound annual growth rate (CAGR) of 13.8%, surpassing global benchmarks.
While consumer devices—such as smartphones, laptops, and industrial systems—still account for 70% of demand, new growth drivers are emerging:
- Electric vehicles (EVs), which could account for one-third of new car sales by 2030.
- Mass deployment of 5G networks.
- Hyperscale data centers, with capacity expected to increase by more than 75% over the next decade.
Evolving talent and clusters
India already has over 250,000 semiconductor professionals, with 43,000 new hires just in 2024-25. By 2030, this figure could grow by 120% to nearly 400,000 specialists, making the country the second-largest talent hub worldwide after the United States.
Although Bangalore and Hyderabad currently host more than 80% of the semiconductor workforce in Global Capability Centers (GCCs), pressure on these cities is prompting companies to diversify. In this context, second-tier cities are emerging strongly, offering more competitive costs and government support, often aligned with electric vehicle clusters and local industries.
Notable examples include Micron’s ATMP plant in Gujarat, boosting assembly and testing capabilities, and the ESDM parks in Tamil Nadu and Kerala, consolidating these regions as emerging semiconductor hubs.
Strategic opportunity in the global supply chain
The initiative comes at a time of increasing geopolitical tensions in the global supply chain—from the tech rivalry between the U.S. and China to heavy dependence on Taiwan—and amid the rollout of programs like the CHIPS Act in the U.S. and the EU.
Within this landscape, India positions itself as a stable alternative not only for chip design but also for advanced ATMP processes (assembly, testing, marking, and packaging).
According to the report The Chip Catalyst: India’s Emerging Semiconductor Ecosystem, what sets India apart is the combination of scale, competitive costs, and innovation capacity. These factors make Tier-2 hubs a strategic bet for early investors.
Frequently Asked Questions (FAQ)
What are Tier-2 semiconductor hubs?
Cities outside the traditional centers like Bangalore or Hyderabad that are attracting investment in manufacturing, design, and embedded systems through incentives and lower operational costs.
What is the projection for India’s semiconductor market?
It is expected to grow from $54.3 billion in 2025 to $135 billion by 2030, with a CAGR of 13.8%.
Which sectors will drive chip demand in India?
Besides smartphones and laptops, notable sectors include electric vehicles, 5G, and large-scale data centers.
What role does the India Semiconductor Mission play?
The ISM promotes strategic projects with investments exceeding ₹1.6 lakh crore and thousands of jobs, aiming to reduce reliance on imports and build domestic capacity across the entire value chain.