Whalesbook
India's Strategic Push into Advanced Packaging
The inauguration of 3DGS Semicon's advanced packaging facility in Odisha marks a significant step in India's strategy to create higher value within the semiconductor industry. Global demand for semiconductors, driven by AI, 5G, and automotive sectors, is surging. Advanced packaging, especially heterogeneous integration, is key to boosting performance. This approach integrates multiple specialized chiplets into one package, addressing limits in traditional chip scaling. The facility supports the India Semiconductor Mission's (ISM) goal to build a comprehensive, self-reliant semiconductor ecosystem. Expanding into packaging fills a critical gap, moving India up the value chain from its traditional strength in chip design. This initiative supports India's aim to reach a $103 billion semiconductor market and a $400 billion electronics market by 2030.
Why Advanced Packaging and Chiplets Matter
Advanced packaging technologies, such as heterogeneous integration and chiplets, are transforming the industry. With traditional chip scaling becoming more complex and costly, chipmakers are integrating specialized chiplets into single packages. This improves performance, power efficiency, and speeds up time-to-market. The global chiplet market is expected to grow significantly, potentially reaching $411 billion by 2035. The 3DGS Semicon facility, using expertise from US-based 3D Glass Solutions, is poised to benefit from this trend. It will create specialized packaging solutions linking chip fabrication with final product assembly. This packaging segment has been a bottleneck for India, making this investment strategically important. The India Electronics and Semiconductor Association (IESA) sees these developments as vital for chiplet innovation and strengthening domestic supply chains, shifting India from passive participation to active value creation.
Global Trends and India's Semiconductor Goals
India's move into advanced packaging is well-timed, amid a global realignment of semiconductor supply chains. Geopolitical tensions and the push for supply chain diversification are driving heavy investment in domestic semiconductor capabilities worldwide, seen in initiatives like the US CHIPS Act and European Chips Act. India's ISM, supported by about $10 billion, aims to foster both chip design and manufacturing. India's strong foundation lies in semiconductor design, employing an estimated 20% of the global design workforce. However, challenges persist. India has historically lacked core manufacturing and equipment capabilities, large-scale wafer production, and a complete supply chain for critical inputs like specialty chemicals. Major global players like TSMC, Intel, Samsung, ASE Technology Holding, and Amkor Technology currently dominate advanced packaging with technologies like CoWoS, InFO, Foveros, and fan-out packaging. The IESA works with government bodies like MeitY and state governments to align industry goals with national priorities, fostering partnerships and promoting startups.
Hurdles for India's Chip Manufacturing Ambitions
Despite government support and growing investment, India's ambitions for advanced semiconductor manufacturing face significant challenges. India imports over 80-90% of its semiconductor needs, creating exposure to supply chain disruptions and geopolitical risks. While design capabilities are strong, the core manufacturing and equipment infrastructure remains underdeveloped. Essential infrastructure, including uninterrupted power, ultra-pure water, and specialized logistics, is often lacking. A significant talent gap is also projected, with estimates suggesting a shortfall of 250,000-300,000 skilled professionals by 2027, especially in fabrication and advanced packaging. India's R&D investment as a percentage of GDP remains low compared to global leaders. The high cost of building fabrication units, estimated at $5-7 billion, along with complex regulations and bureaucracy, creates financial and operational risks. India faces intense competition from established Asian players like Taiwan, South Korea, and China, which hold dominant positions in advanced packaging and possess mature, integrated supply chains.
Outlook for India's Semiconductor Ecosystem
The opening of the 3DGS Semicon facility and other ongoing projects are boosting investor confidence in India's semiconductor goals. Government policies, such as the India Semiconductor Mission and Production Linked Incentive (PLI) schemes, aim to attract significant investment, with IESA members alone committing over $21 billion. India's deep-tech sector, including semiconductors, is seeing a surge in venture capital funding, signaling a wider shift toward science and IP-driven innovation. As India attracts investment and builds manufacturing capabilities, its role in advanced packaging is key to securing its position in the future global semiconductor value chain.