India's Semiconductor Revolution Pioneering the Global Backend for Chip Innovation.

India’s Semiconductor Renaissance: Becoming the Global BPO for OSA

In the rapidly evolving landscape of global technology, semiconductors stand as the unsung heroes powering everything from smartphones to electric vehicles and artificial intelligence systems. As the world grapples with supply chain disruptions, geopolitical tensions, and an insatiable demand for advanced electronics, a intriguing question emerges: Can India position itself as the world’s Business Process Outsourcing (BPO) equivalent for semiconductors? This analogy draws from India’s storied success in the IT services sector, where it became the go-to destination for cost-effective, skilled backend operations. Similarly, in semiconductors, the “BPO” role would focus on the outsourced assembly, testing, and packaging (OSAT) segment a critical but less capital-intensive part of the chip-making value chain. Rather than competing head-on with giants like Taiwan in high-end fabrication, India could leverage its vast talent pool, improving infrastructure, and government incentives to become a reliable global hub for these essential backend services. This shift could not only generate millions of jobs but also integrate India deeper into the international semiconductor ecosystem, fostering economic resilience and technological independence.

The semiconductor industry is a complex web of interconnected processes, often likened to a symphony where each stage must harmonize perfectly. At its core, chip production begins with design, where engineers craft intricate blueprints using sophisticated software. This is followed by fabrication, or “fab,” where ultra-pure silicon wafers are etched with billions of transistors in billion-dollar cleanrooms. Finally, comes OSAT the backend phase where wafers are diced into individual chips, assembled into packages, rigorously tested for defects, and prepared for integration into end products. While fabrication grabs headlines for its technological prowess and massive investments, OSAT is the workhorse that ensures chips are reliable and ready for market. Globally, the OSAT market is booming, projected to grow from around $45 billion in 2024 to over $85 billion by 2033, driven by the explosion in demand for AI, 5G, and electric vehicles. Companies like Taiwan’s ASE Group and Amkor Technology dominate this space, but supply bottlenecks during the COVID-19 pandemic exposed vulnerabilities, prompting a search for diversified locations. Enter India, with its proven track record in outsourcing complex tasks, a young demographic dividend, and a strategic push to climb the value chain.

India’s journey in semiconductors has been marked by ambition tempered with pragmatism. Historically, the country excelled in chip design, hosting design centers for global majors like Intel, Qualcomm, and AMD in cities such as Bengaluru and Hyderabad. Over 20% of the world’s chip designers are Indian, contributing to innovations in processors and embedded systems. However, manufacturing lagged due to high capital requirements, water and power demands, and a lack of ecosystem maturity. Recognizing this, the Indian government launched the India Semiconductor Mission (ISM) in 2021 with a $10 billion outlay, emphasizing not just fabs but also OSAT and assembly, testing, marking, and packaging (ATMP) units. This policy framework offers up to 50% fiscal support for eligible projects, alongside state-level incentives that can cover an additional 20-25% of costs. By mid-2025, these efforts have borne fruit, with cumulative investments surpassing $18 billion across 10 sanctioned projects. For instance, in August 2025 alone, four new units were approved in Odisha, Punjab, and Andhra Pradesh, focusing on silicon carbide (SiC) fabrication, advanced packaging, and high-power discrete devices. These developments signal a deliberate strategy to start with OSAT, where entry barriers are lower, and gradually build toward full-scale manufacturing.

One of the key advantages India brings to the OSAT table is its abundant, cost-effective labor force skilled in electronics and software. With over 800,000 engineering graduates annually, many specializing in VLSI (Very Large Scale Integration) design and testing, India has a ready talent pool that can be upskilled for semiconductor backend operations. Cities like Bengaluru, already home to R&D hubs for companies such as Texas Instruments and NXP Semiconductors, provide a foundation for expanding into assembly and testing. Moreover, India’s improving logistics networks and proximity to growing markets in Southeast Asia and the Middle East reduce shipping times and costs compared to traditional hubs. Global trends further bolster this case: As chipmakers diversify away from China amid U.S.-China trade tensions, India’s neutral geopolitical stance and “China+1” appeal make it an attractive alternative. Reports from industry analysts indicate that OSAT capacity bottlenecks have persisted post-pandemic, with demand for advanced packaging like fan-out wafer-level packaging and heterogeneous integration l outstripping supply. India’s entry could alleviate these pressures, much like how it scaled BPO services in the 2000s to handle global back-office needs.

Recent approvals under the ISM highlight India’s accelerating momentum. In Odisha, SiCSem Private Limited, partnering with UK’s Clas-SiC Wafer Fab, is establishing India’s first commercial SiC compound semiconductor fab, capable of producing 60,000 wafers annually and packaging 96 million units. This facility targets high-efficiency applications in electric vehicles and renewable energy, aligning with global sustainability goals. Adjacent to it, 3D Glass Solutions is setting up an advanced packaging unit using glass interposers and 3D integration modules, a technology poised for growth in data centers and AI hardware. In Punjab, Continental Device India Limited (CDIL) is expanding its Mohali plant to produce MOSFETs, IGBTs, and Schottky diodes using both silicon and SiC, catering to automotive and industrial sectors. Meanwhile, Andhra Pradesh’s ASIP Technologies, in collaboration with South Korea’s APACT, will build a testing and packaging facility with a 96 million-unit annual capacity. These projects, with a combined investment of about $524 million, are expected to create over 2,000 direct jobs and thousands more indirectly, stimulating local ecosystems for chemicals, gases, and equipment suppliers.

Beyond these, earlier milestones underscore the strategy’s viability. Micron Technology’s $2.56 billion ATMP facility in Gujarat, approved in June 2023, is ramping up phased production, while Tata Electronics’ partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC) in Dholera promises 50,000 wafers per month. Tata’s OSAT unit in Assam, with a $3.07 billion investment, aims for 48 million chips daily, focusing on flip-chip packaging. CG Power’s collaboration with Renesas and Stars Microelectronics in Sanand targets 15 million chips per day, and Kaynes Semicon’s Gujarat plant adds another 6.33 million. The HCL-Foxconn joint venture in Uttar Pradesh, approved in May 2025, will process 20,000 wafers monthly. Collectively, these initiatives span diverse technologies from legacy nodes (28-90nm) for consumer electronics to advanced compounds like SiC for EVs positioning India to capture a slice of the $50-60 billion OSAT market by 2030.

Yet, India’s path to becoming the semiconductor BPO is fraught with challenges that demand nuanced solutions. Infrastructure remains a bottleneck: Semiconductor operations require uninterrupted power, ultra-pure water (millions of liters daily), and stable temperatures, which India’s grid and water systems sometimes struggle to provide consistently. Periodic shortages in states like Tamil Nadu and Karnataka highlight the need for dedicated industrial clusters with resilient utilities. Talent gaps also loom large; while India produces engineers in droves, specialized skills in cleanroom operations, yield optimization, and advanced testing are scarce. The global talent shortage estimated at over a million workers intensifies competition, with established players like Taiwan offering lucrative packages. To counter this, initiatives like the ISM’s support for 278 academic institutions and 72 startups are crucial, funding prototypes and offering up to 50% cost coverage for design projects capped at $18 million each.

Intellectual property (IP) protection and policy stability are additional hurdles. Foreign investors seek assurances against IP theft, a concern amplified by India’s past enforcement issues. A predictable regulatory environment is vital, as semiconductor projects span decades and involve billions in sunk costs. Competition from Southeast Asia Malaysia and Vietnam already host OSAT facilities for Intel and Samsung adds pressure, with these nations offering lower labor costs and established supplier networks. Moreover, basic OSAT like wire-bonding won’t suffice; India must ascend to high-value segments such as wafer-level packaging and 3D integration to attract marquee clients. Small players, including MSMEs, face capital barriers, with high setup costs deterring entry despite opportunities in niche areas like power modules for EVs.

Despite these obstacles, opportunities abound, fueled by global market dynamics and India’s intrinsic strengths. The OSAT sector’s growth is propelled by AI and data centers, with chip sales forecasted to soar in 2025. India’s market alone is projected to expand from $38 billion in 2023 to $45-50 billion by end-2025, reaching $103 billion by 2030 at a 13.76% CAGR. Strategic partnerships, like HorngCom’s tie-up with RRP Electronics for OSAT expansion, exemplify how India can integrate into global chains. The “China+1” shift is accelerating, with OEMs relocating due to rising costs and tensions, benefiting India’s cost-effective labor and business-friendly reforms. By focusing on OSAT first, India can build expertise backward into fabs, creating a vendor ecosystem for substrates, test handlers, and chemicals. Joint programs with global toolmakers like ASML and Applied Materials could upgrade local talent, while incentives lock in long-term contracts from firms like NVIDIA and AMD.

Case studies illustrate this potential. Tata Electronics’ Assam OSAT facility, set to launch in 2025, will handle advanced packaging for automotive and consumer chips, drawing on Tata’s manufacturing prowess. Micron’s Gujarat unit, already in phase one, demonstrates how foreign investment can spur local supply chains, with plans for DRAM and NAND testing. Kaynes Technology’s $376 million plant in Gujarat, producing 6.33 million chips daily, highlights mid-cap firms’ role in scaling OSAT. In Odisha, the SiC fab addresses the growing demand for efficient power semiconductors in EVs, where SiC reduces energy loss by up to 30%. These projects not only reduce import dependency India currently imports 95% of its semiconductors but also enhance national security by securing supplies for defense and telecom.

Looking ahead, India’s semiconductor ambitions could yield profound economic impacts. Projections suggest the sector could create 6 million jobs by 2030, boosting GDP through exports and value addition. With electronics manufacturing eyeing $300 billion by 2030, OSAT could contribute $20-30 billion annually, positioning India among the top five global players.  Success hinges on execution: Streamlining approvals, investing in R&D, and fostering academia-industry ties. Emerging trends like GaN (Gallium Nitride) for high-frequency applications and display fabs remain gaps, but progress in SiC and CMOS paves the way. If India sustains momentum through stable policies, skill development, and international collaborations it could indeed become the world’s semiconductor BPO, transforming from a design powerhouse to an indispensable backend partner.

In conclusion, the question of whether India can become the world’s BPO for semiconductors is not merely aspirational but grounded in strategic foresight. By capitalizing on OSAT’s lower barriers, leveraging its human capital, and navigating challenges with resilience, India stands on the cusp of a semiconductor renaissance. This evolution promises not just economic gains but a redefined global role, where India ensures supply chain stability and drives innovation. As the world watches, India’s backend prowess could very well power the future.

Abhisht Chaturvedi is a Research Analyst at Insights International. His research interests include tech policy, media, and communications.