Semiconductor wafer with India map overlay, Taiwan flag in background

By Ramachandran Rajeev Kumar — 2026-01-16

By Ramachandran Rajeev Kumar

The Numbers That Should Terrify You

Taiwan started its semiconductor journey in 1974. By 2007—33 years later—it became the world's second-largest microchip supplier. Today, TSMC alone accounts for 60% of global foundry revenue.

South Korea started in the 1980s. It took Samsung and SK Hynix 30+ years to reach global leadership in memory chips.

China has spent over $150 billion in the last decade trying to catch up. It still trails Taiwan and Korea by two generations in cutting-edge chips.

India's Semiconductor Mission launched on December 15, 2021.

We're 4 years in. And we're already declaring victory.

What We've Actually Achieved

Let's be honest about where we stand in January 2026:

The "Wins"

1. Micron (USA) - Packaging, Not Fabrication

2. Tata + PSMC (Taiwan's Minor League)

3. Foxconn + HCL Joint Venture

4. Kaynes Semicon

The Reality Check

India's Semiconductor Mission has catalyzed $18.2 billion cumulative investment across ten approved projects.

Sounds impressive—until you realize:

We're celebrating $18B. The big boys spend that on one advanced fab.

The Taiwan Problem: Why TSMC Won't Come

Here's what nobody wants to admit: Participation from Taiwan's TSMC and South Korea's Samsung is not yet anticipated, though India is in plans to partner with TSMC.

Translation: TSMC isn't coming. Samsung isn't coming. We got PSMC—Taiwan's seventh-largest foundry—and declared victory.

Why Taiwan's Giants Say No

Taiwanese companies and private enterprises have experienced multiple challenges in terms of greater cooperation with India, including:

1. Cumbersome Administrative Structures Every approval requires 17 ministries, 42 clearances, and infinite patience. Taiwan's companies are used to "single window" systems where approvals take weeks, not years.

2. Lack of Experienced Engineers India has brilliant chip designers (Qualcomm, Intel, Nvidia employ thousands here). But fabrication engineers—the specialists who run fabs—are rare. Taiwan offers advanced courses in nano-engineering and chip design, but India hasn't built equivalent programs at scale.

3. High Tariffs on Electronics Component Imports Fabs need hundreds of specialized components—high-purity gases, photolithography chemicals, precision equipment. India's import duties make these 20-30% more expensive than Taiwan or China.

4. Inadequate Infrastructure This is the killer.

Semiconductor fabrication requires precision-grade facilities, uninterrupted high-voltage power, large volumes of ultrapure water, Class 1 cleanrooms, and specialized transport and logistics networks.

India's status:

5. Complex Labor Laws, Environmental Regulations, Import/Export Restrictions Taiwanese companies are hesitant to invest in India due to these regulatory burdens.

What Taiwan Did Right (And We Haven't)

Taiwan didn't become Silicon Island by accident. Here's the playbook:

1. Government Commitment—Actual, Not Rhetorical

In 1974, Taiwan's government launched the RCA Project, facilitating critical technology transfer from the U.S. They didn't just offer subsidies—they sent engineers to RCA in New Jersey for two years, learned the technology, brought it back, and built a demonstration fab at ITRI.

By end of 1977, the fab had 70% yield rate—surpassing RCA's own facilities.

India's approach? Subsidies and hoping foreign companies will teach us.

2. Talent Pipeline—Built Systematically

Taiwan created specialized semiconductor engineering programs in the 1980s. Every major university taught cleanroom processes, lithography, yield optimization.

India's Chips to Startup (C2S) Program aims to train 85,000 engineers—but it started in 2024, three years after the Semiconductor Mission launched. We're training engineers for fabs that don't exist yet.

3. Infrastructure—Built Before Fabs, Not After

Taiwan built Hsinchu Science Park in 1980—before major fabs arrived. Guaranteed power, water, cleanrooms, specialized logistics. Companies could move in and start manufacturing immediately.

India announced fabs in 2023 and is still building infrastructure around them. Dholera is a greenfield site—no power substation, no water treatment plant, no worker housing when Tata announced the project.

4. Supply Chain Ecosystem—Developed Locally

Taiwan didn't wait for global suppliers. It built a domestic ecosystem:

For semiconductor fabs to succeed, they require numerous suppliers for raw materials and components, as well as an unlimited power supply. India is still importing 90%+ of these from Taiwan, Korea, and Japan.

The 7 Things India Must Fix—Now

If we're serious about attracting Taiwan's big players (or at least keeping PSMC happy), here's what must change:

1. Single-Window Clearance—For Real This Time

Current Reality: Cumbersome administrative structures slow every decision.

What Taiwan Sees: Apply for fab approval in Taiwan → 6 weeks. Apply in India → 6 months (if you're lucky).

Fix: Create a Semiconductor Fast-Track Authority with:

Model it on Singapore's Economic Development Board—which can green-light a $5 billion fab in 45 days.

2. Unified Incentive Package—Stop Fragmented Negotiations

India needs to present investors with a seamless term sheet that combines ISM incentives, state-level subsidies, and committed utility access, avoiding the fragmented negotiations that slow project closure.

Current Problem: Companies negotiate with:

Each entity makes separate promises. Nothing is binding until all sign. Timeline: infinite.

Fix: One contract, three signatures (ISM, state, company). Everything else pre-approved.

3. Zero Import Duties on Fab Equipment and Materials

High tariffs on electronics component imports hurt competitiveness.

Reality: A lithography machine costs $150 million. Add 20% import duty = $180 million. Your competitor in Taiwan pays $150 million.

Fix: Exempt all semiconductor manufacturing equipment and materials from import duties—permanently. We're not "protecting" any domestic industry (we have none). We're just making ourselves uncompetitive.

4. Fab-Ready Industrial Parks—Build Before Announcing Projects

Current Approach: Announce fab → scramble to build infrastructure → delay by 2-3 years.

Taiwan's Approach: Build infrastructure → invite companies → start production in 18 months.

Fix: Designate 5 "Semiconductor Zones" with:

Build these first. Then invite companies.

5. Talent Development—Technical Collaborations with Taiwan

Technical collaborations between Indian institutes (like IITs) and Taiwanese universities are in the works.

Accelerate This:

Goal: 10,000 fab-ready engineers by 2028. Not designers—fabrication specialists who know yield optimization, defect analysis, and cleanroom protocols.

6. Supply Chain Localization Incentives

Establishing a reliable supply chain network within India is crucial, but will also take time and investment.

Fix: Create a Semiconductor Supply Chain PLI Scheme for:

Incentive: 50% capital subsidy for first 5 companies in each category.

By 2030, we should source 50% of inputs domestically. Right now it's <10%.

7. Regulatory Streamlining—Environmental and Labor

Taiwanese companies are hesitant to invest due to complex labor laws, environmental regulations.

Specific Fixes:

The Realistic Timeline

Let's be brutally honest about what's achievable:

By 2027:

By 2030:

By 2035:

The Truth: Taiwan took 33 years (1974-2007) to reach global leadership. We're not leapfrogging that timeline. The best we can do is accelerate by learning from their playbook.

The Choice: Be Taiwan or Be Vietnam?

Two models for late-stage semiconductor entrants:

Model 1: Taiwan (Fab Powerhouse)

Model 2: Vietnam (Packaging Hub)

India is trying Model 1 with Model 2 resources.

Recommendation: Do both—but sequence correctly.

2025-2030: Vietnam Model

2030-2040: Taiwan Model

Trying to do advanced fabs immediately = failure. We don't have the talent, infrastructure, or supply chain.

The Political Reality Nobody Discusses

Here's the inconvenient truth: Semiconductors are a geopolitical weapon, not just an industry.

Taiwan controls 60% of global chip production. China wants to invade Taiwan. The U.S. wants to diversify supply chains. India is useful—but we're not replacing Taiwan.

What this means:

Conclusion: India can become a strong secondary player—not the leader. And that's fine. 8% of global semiconductor manufacturing = $60B annual revenue = 500,000 jobs. That's worth chasing.

But let's stop pretending TSMC is coming. They're not.

The Brutal Summary

Where We Are: 4 years into a 40-year journey, celebrating packaging plants and legacy fabs.

Where We're Headed: Respectable backend player by 2030 if we fix infrastructure, talent, and regulatory issues. Marginal fabrication player by 2035.

Where We Could Be: Significant global player by 2040 if we stop overpromising, start executing, and accept that Taiwan's playbook takes decades—not years.

What We Must Do Now:

  1. Fix infrastructure (power, water, cleanrooms) before announcing more fabs
  2. Train 10,000 fab engineers through Taiwan partnerships
  3. Streamline regulations to Taiwan/Singapore speed
  4. Zero import duties on semiconductor equipment
  5. Build domestic supply chain with aggressive subsidies
  6. Accept we're building for 2035-2040, not 2027

The Mantra: Under-promise. Over-deliver. Stop chasing TSMC. Make PSMC successful. The rest will follow.

Sources:

Ramachandran Rajeev Kumar is the founder of BarathVector. Agree? Disagree? The debate continues in the comments.