Specialized precision-engineering supplier ecosystem

A semiconductor fab is one of the most equipment-dependent factories humans build. As of 2026, India expects to import nearly 100% of the tools, parts and silicon wafers those fabs will need by 2030, with only around 10% of specialty gases and chemicals produced domestically.

The difficulty here is structural, not incidental. The equipment that etches, deposits, patterns and inspects features on a wafer — lithography, deposition, etch, chemical-mechanical planarisation, metrology — sits at the limit of what precision engineering can do. The market for it is dominated by a small group of companies in the Netherlands, Japan and the United States, each carrying decades of intellectual property, research capability and customer relationships. Behind those firms sits a deeper supplier ecosystem: ultra-high-precision machine tools, advanced controls, specialised production systems. Only a handful of national economies host it.

India's position today is early. Imports account for more than 85% of the cost of setting up a fab and around 50% of wafer fabrication costs; projections show these declining to 68% and 30% respectively by 2030. Thirteen manufacturing projects across seven states had been approved as of May 2026, representing over US$17 billion in announced investment — but the ecosystem to build and operate those facilities remains largely absent domestically.

The indigenous suppliers that exist are at the research-and-development stage. ASM Technologies formed a 50:50 joint venture with Hind High Vacuum to manufacture semiconductor tools, subsystems and components, drawing on more than 2,000 person-years of experience in PVD, CVD, RTP, etch, CMP and inspection tool design. Navson Technologies, a 2016 materials-research spin-off, supplies coating and deposition solutions largely for academic use. At GAETEC, DRDO's Hyderabad facility, gallium-nitride MMICs cleared functionality tests in March 2023 — real capability, but confined to niche compound semiconductors for defence and space, not the broad precision base a commercial fab draws on.

The gap persists because precision engineering, advanced controls and specialised production systems remain areas of dependence across Indian capital goods generally. A fab supplier network is the accumulated output of that base, developed over decades in Taiwan, Japan, South Korea and the United States — networks India is unlikely to replicate quickly.

What it would take is patient, layered investment: industry estimates put the incentive requirement at nearly US$80 billion through 2035. The nearer opportunity lies in packaging and testing materials, where roughly 30% domestic production looks achievable by 2030 — a foothold, not the summit.