India Launches $13.5 Billion Semiconductor Expansion to Secure Global Supply Chains

As the global semiconductor market has experienced growth exceeding 20% over the past two years, largely driven by the rising demand for artificial intelligence, India has moved to solidify its role in the industry. This initiative evolved into a multi-phase program, with the government approving a second phase in 2026. Building on an initial $8-billion investment, the government has now launched a $13.5-billion second phase of the mission. This expansion includes policy reforms designed to facilitate collaboration between international companies and domestic entities, such as startups and design firms.

These strategic developments are intended to position the country as a reliable partner capable of mitigating risks associated with the weaponisation of global supply chains. The government has approved twelve projects under the mission, with production now commencing at new facilities in Mohali and Surat. Furthermore, the Prime Minister has identified compound semiconductors and silicon photonics as key priority areas for the development of the nation's AI infrastructure.

1. The government launched the $13.5 billion second phase of the "Semiconductor Mission" to fund industry growth. This follows an $8 billion first phase initiated in 2022. The investments target demand within the global semiconductor market. That market grew from $527 billion in 2022 to $634 billion in 2024. This represents a 20.3% increase driven by Artificial Intelligence (AI).

2. The initiative addresses supply chain vulnerabilities. Prime Minister Narendra Modi stated on September 17, 2026, that India serves as a trustworthy location to mitigate risks from the weaponisation of global supply chains. The government intends to attract international firms seeking stable manufacturing partners.

3. The government approved 12 projects under the Semiconductor Mission. Production began at two plants in Mohali and Surat. These facilities represent the shift from policy planning to manufacturing.

4. The Indian government is prioritizing compound semiconductors and silicon photonics. Officials identify these technologies as essential for artificial intelligence (AI) infrastructure. India intends to capture a specialized niche in the global semiconductor market through this focus.

1. The program has approved 12 projects but faces challenges in scaling production. Industry reports indicate that past efforts struggled with infrastructure limitations. The $13.5 billion phase relies on consistent progress at new sites in Mohali and Surat.

2. The government committed $21.5 billion to the project across two phases. Policymakers designed these fiscal incentives to build long-term domestic capacity rather than temporary assembly operations.

3. India previously attempted to build a domestic semiconductor industry. Limited infrastructure stalled those earlier efforts. The government now aims to address these past challenges to establish a competitive sector under its current policy framework.

4. Independent analysts have not publicly assessed execution risks for the new Mohali and Surat plants. No source cited in this report provides a dissenting industry perspective on the $13.5-billion expansion.