tech · 2026-07-05
India Opens Its First Chip Assembly Plant
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PM Modi inaugurated CG Semi's OSAT facility in Sanand, Gujarat, India's first operational semiconductor assembly and test plant under the India Semiconductor Mission.The plant can produce 200Mn chips/year now, targeting 5Bn/year. First chips were exported to Japan, marking India's entry into the global chip supply chain.Women from rural India trained in Malaysia now work at the plant. The facility aims to create large-scale jobs across chip design, fabrication, and packaging.
What exactly will this Sanand plant do?
The CG Semi facility in Sanand is an OSAT plant, meaning it handles assembly, packaging, and testing of semiconductor chips, not wafer fabrication. It takes silicon dies made elsewhere and packages them into finished chips. Its first batch is being exported to Japan. The plant is a partnership with Thai and Japanese companies.
Who are CG Semi's Thai and Japanese partners?
CG Semi partnered with Thailand's Cal-Comp Electronics and Japanese customers for its Sanand plant. Cal-Comp is a major contract electronics manufacturer. The Japanese partners are chip buyers, not equity investors. This trust-based model lets India access established supply chains without building customer relationships from scratch.
How many OSAT plants does India have planned?
India's Semiconductor Mission has approved multiple projects beyond Sanand. Tata Electronics is building a fab in Dholera, Gujarat, and an OSAT in Morigaon, Assam. Kaynes Technology has an OSAT approved in Sanand. The govt allocated ~₹76K Cr for semiconductor incentives. A single OSAT plant typically needs 3 to 5 years to reach full capacity utilization.
What chip types will Sanand produce first?
The Sanand plant will initially produce chips for consumer electronics and industrial applications, not cutting-edge processors. Think power management ICs and sensor chips used in appliances and automobiles. These are mature-node chips, 28nm and above, where global demand exceeds supply. India's auto sector alone imports ~$3Bn in chips annually.
How does assembly differ from chip fabrication?
OSAT is the back-end of chipmaking. Fabrication (front-end) involves etching circuits onto silicon wafers using equipment costing $100Mn+ per machine, made by firms like ASML. Assembly and testing require lower capital and less extreme precision. India currently has no commercial fab. OSAT is the entry point, like how India entered phones via assembly before making components.
Why can't India just build a fab directly?
A single advanced fab costs $10 to 20Bn and requires thousands of specialized engineers. TSMC's Arizona fab took 4+ years and faced chronic talent shortages. India lacks the ultra-pure water infrastructure, chemical supply chains, and deep process engineering talent a fab demands. OSAT requires roughly one-tenth the capital, making it a practical first step.
Could 5Bn chips/year matter globally?
Global chip production exceeds 1 trillion units annually. At 5Bn chips/year, CG Semi would handle ~0.5% of global volume. But impact depends on chip type. In mature-node OSAT, where margins are thin and volumes matter, 5Bn puts India alongside mid-tier Malaysian and Vietnamese facilities. For India's domestic chip imports worth ~$10Bn/year, even partial substitution matters.
What makes OSAT viable without a local fab?
OSAT plants import unpackaged silicon dies, which are small and cheap to ship. A fab next door is ideal but unnecessary. Malaysia built its $30Bn semiconductor industry on OSAT decades before any local fab existed, importing dies from Taiwan and the US. What matters more is proximity to end-customers like auto plants and electronics assemblers, which Gujarat has.
Which workers benefit from this plant?
Women from India's hinterlands who completed ITI training were sent to Malaysia to learn advanced semiconductor manufacturing techniques. Many had never held a passport before. They now work at the Sanand plant. The facility targets employment across skill levels, from technicians to engineers, in a region already home to Tata Electronics' fab project.
How many jobs does one OSAT plant create?
A typical OSAT facility employs 2K to 5K direct workers at full capacity. Indirect jobs in logistics, chemicals, and equipment maintenance add a 2 to 3x multiplier. Malaysia's Penang semiconductor cluster, which started with OSAT, now employs ~300K people across 350+ firms. CG Semi's Sanand plant is at early-stage staffing.
What training pipeline feeds these workers?
India's ITI system trains ~1Mn students/year in vocational skills, but semiconductor-specific modules are new. CG Semi sends workers to Malaysia for hands-on training. The govt's Chips2Startup program funds curriculum development at 100+ engineering colleges. The bottleneck is process technicians who can operate cleanroom equipment, a skill set ITIs don't traditionally teach.
Could rural women scale in this sector?
Malaysia's semiconductor workforce is ~30% women, concentrated in assembly and testing roles that require precision manual work. India's Sanand plant is replicating this pattern with ITI-trained rural women. The structural enabler is that OSAT work requires dexterity and discipline more than advanced degrees, creating a rare manufacturing pathway for women without college education.
Source: thehindu.com