India’s semiconductor journey has moved from big announcements to factory activity. Prime Minister Narendra Modi inaugurated CG Semi’s semiconductor assembly and testing facility in Sanand, Gujarat, marking India’s third semiconductor manufacturing plant to become active in recent months.

This is a big moment because chips are used in almost every modern product – smartphones, cars, EVs, laptops, defence systems, medical devices, telecom equipment and even home appliances. A country that can package, test and later manufacture chips has more control over its technology future.

The latest plant is not a full chip fabrication unit where wafers are made from scratch. It is an OSAT facility, which means outsourced semiconductor assembly and test. In simple words, it takes chip components, packages them, tests them and makes them ready for use in devices.

What has happened

CG Semi’s facility has been inaugurated in Sanand, Gujarat. The project is linked to CG Power and Industrial Solutions, along with Japan’s Renesas Electronics and Thailand’s Stars Microelectronics.

The investment is reported at over Rs. 7,600 crore for two advanced semiconductor packaging and testing facilities. The first facility has now started operations, while the second is expected later.

This comes after two earlier semiconductor milestones in India. Micron began commercial production from its Gujarat facility earlier in 2026, and Kaynes Semicon’s Sanand plant was inaugurated in March 2026.

So, within six months, India has seen three major chip-related plants become active. That pace is important because semiconductor ecosystems usually take years to build.

Why OSAT plants matter

Many people think semiconductor manufacturing only means making chips from raw wafers. But the full chip supply chain has several steps.

First, the chip is designed. Then wafers are fabricated. After that, the chip is assembled, packaged and tested. Only then can it go into a phone, car, server or appliance.

OSAT plants handle the later stages. This may sound less glamorous than a full fab, but it is still highly important. Without packaging and testing, chips cannot be used reliably.

For example, a chip going into an electric car must work safely in heat, vibration and long driving conditions. A chip for a smartphone must be compact, power-efficient and tested properly. Packaging and testing make sure these chips are ready for real-world use.

How this can impact India’s future

1. The first impact will be on electronics manufacturing. India already makes smartphones, telecom equipment, consumer electronics and auto components at scale. If chip packaging and testing happen locally, manufacturers may get better supply support over time.
2. The second impact will be on jobs. Semiconductor plants need engineers, technicians, quality teams, equipment specialists, materials experts and logistics workers. The wider ecosystem also creates work for suppliers, training centres and service providers.
3. The third impact will be on strategic security. Chips are now linked to national strength. Countries do not want to depend fully on foreign supply chains, especially after the global chip shortage showed how easily car and electronics production can be disrupted.
4. The fourth impact will be on exports. If Indian plants can meet global quality standards, they can serve international customers and make India part of the global chip supply chain.

Why Gujarat is becoming important

Sanand is becoming one of India’s most visible semiconductor hubs. Micron, Kaynes and CG Semi are all linked to Gujarat’s growing chip ecosystem.

This creates a cluster effect. When several companies operate in one region, suppliers, skilled workers, training institutes and logistics networks also begin to grow around them.

A cluster is useful because semiconductor manufacturing cannot work alone. It needs cleanrooms, gases, chemicals, precision tools, packaging material, testing equipment and trained people. The more the ecosystem grows, the easier it becomes for future companies to set up operations.

What it means for cars and EVs

The auto industry is one of the biggest beneficiaries of local chip capacity.

Modern cars use chips for engine control, infotainment, braking systems, safety sensors, cameras, battery management, charging systems and connected features. EVs need even more electronics because batteries, motors, inverters and charging systems are all chip-heavy.

During the global chip shortage, many automakers had to delay deliveries or reduce production. Local semiconductor packaging and testing may not solve every supply issue immediately, but it can reduce dependence over time.

For Indian EV makers, local chip ecosystem growth can support better component availability, faster development and possibly more customized solutions.

What it means for mobiles and consumer electronics

India is already one of the world’s largest smartphone markets and a major mobile manufacturing base. But most chips still come from outside India.

With more semiconductor facilities, India can slowly move up the electronics value chain. Instead of only assembling phones, the country can handle more high-value parts of the supply chain.

This can help in smartphones, wearables, laptops, smart TVs, routers and IoT devices. IoT means connected devices like smart meters, sensors, trackers and home automation products.

The big picture

India is not yet competing directly with Taiwan’s TSMC or South Korea’s Samsung in advanced chip fabrication. That level of manufacturing takes decades of investment, deep supplier networks and very advanced technology.

But India is taking a practical route. It is starting with assembly, testing, packaging and legacy-node chip manufacturing, while also building larger projects such as Tata Electronics’ upcoming fab in Dholera.

This is a sensible path. A country does not become a semiconductor power in one step. It builds design talent, packaging capacity, testing capability, supply chains, skilled workers and then moves deeper into fabrication.

Competitors and global context

India’s competition is global. Taiwan, South Korea, China, the US, Japan, Malaysia and Vietnam are all important in different parts of the semiconductor chain.

Taiwan leads in advanced chip manufacturing through companies like TSMC. South Korea is strong in memory chips through Samsung and SK Hynix. The US has major design and equipment strength. Malaysia has long experience in chip packaging and testing.

India’s advantage is its large electronics market, engineering talent, government incentives and rising manufacturing base. Its challenge is execution. Semiconductor plants need stable power, water, precision equipment, skilled labour and strict quality control.

Challenges ahead

1. The biggest challenge is building the full ecosystem. A few plants are a good start, but India also needs suppliers of semiconductor-grade chemicals, gases, wafers, tools and packaging material.
2. The second challenge is talent. Semiconductor manufacturing needs specialized skills. India will need more training programmes with universities, technical institutes and companies.
3. The third challenge is scale. Global chip players work at massive volumes. India must prove that its plants can deliver quality, reliability and cost competitiveness.
4. The fourth challenge is patience. Semiconductor success does not happen in one budget cycle. It needs long-term policy support and steady private investment.

Conclusion with key takeaways

India activating its third semiconductor plant in six months is a strong signal that the country’s chip ambitions are becoming real. CG Semi’s Sanand facility adds another layer to India’s growing semiconductor ecosystem, especially in assembly, packaging and testing.

The impact will not be instant, but it can be deep. Over time, these plants can support electronics manufacturing, EVs, mobile devices, industrial equipment, jobs and exports.

Key takeaways

• India’s third active semiconductor plant is CG Semi’s OSAT facility in Sanand, Gujarat.
• OSAT means semiconductor assembly, packaging and testing.
• The project is linked to CG Power, Renesas Electronics and Stars Microelectronics.
• India has seen three major chip plant milestones in around six months, including Micron, Kaynes and CG Semi.
• The development can support EVs, smartphones, industrial electronics and export manufacturing.
• India still needs stronger supply chains, skilled talent and full-scale fabrication capacity.

Facts Input- ET