India's semiconductor capability map

Everything that goes into a chip or its packaging before any wafer fabrication starts. Three families: (1) silicon and compound semiconductor wafers (the substrates the circuits are etched onto), (2) metals like ultra-pure copper and aluminium for interconnects and packaging, and (3) ceramics and abrasives for tools and substrates. India does not yet make leading-edge silicon wafers, but it has emerging capability in silicon carbide (SiC), copper, aluminium, ceramics, and bromine.

These are consumed during chip manufacturing — they don't end up in the chip but they're essential to make it. Three buckets: (1) ultra-high-purity bulk gases like nitrogen and oxygen, (2) specialty electronic gases like silane, ammonia, hydrogen fluoride, (3) wet chemicals like photoresists, etchants, slurries, and solvents. Purity is everything — anything more than 1 part-per-billion contamination ruins yield.

A modern fab consumes 5–10 million litres of ultra-pure water (UPW) per day. UPW is water with virtually all dissolved ions, particles, organics, bacteria and dissolved gases removed — purer than drinking water by a factor of millions. It's used to rinse wafers between processing steps. Even a few parts-per-billion of contamination kills yield. The water plant alone costs $100–300M for a fab.

A semiconductor cleanroom is graded by particle count: a Class 1 cleanroom has fewer than 1 particle per cubic foot of air larger than 0.5 microns (your house has ~500,000). Achieved through HEPA/ULPA filtration, laminar airflow, controlled humidity (45±5%), pressure, vibration isolation, electrostatic discharge protection. Cleanroom build cost: $10,000–25,000 per square foot for Class 1.

Designing a chip — picking transistors, drawing the layout, running simulations, generating the photomask layouts — happens entirely in software. India has 20%+ of the world's semiconductor design talent but most of it works for foreign companies (Intel, NVIDIA, Qualcomm, AMD all have huge Bangalore offices). The opportunity is moving up from low-margin services to owned IP, products and platforms. Two business models: 'fabless' (you own the chip and sell it) vs. 'design services' (you do design work for others).

The actual machines that make chips — lithography scanners, etchers, deposition tools, ion implanters, metrology systems — are built by ASML, Applied Materials, Lam Research, Tokyo Electron, KLA. These are $50M–$300M each. India can't realistically build these end-to-end yet, but it CAN build the precision sub-components (precision-machined parts, vacuum components, motion stages, automation, dicing/grinding tools) that go INTO these machines. That's a real picks-and-shovels play.

After wafers are made, they're tested, sliced into individual chips, and packaged (encased in plastic with leads). This is OSAT — Outsourced Semiconductor Assembly and Test (called ATMP in India: Assembly, Testing, Marking, Packaging). It's much less capital-intensive than a fab ($1–3 billion vs $15B), the yield curve is shorter, and it's India's most realistic first major semiconductor manufacturing beachhead. Five projects approved under ISM 1.0.

A printed circuit board (PCB) is the green/blue board you see inside any electronic device — copper traces routed through fiberglass laminate connecting all the chips together. PCB assembly (PCBA) is when you actually solder the chips, resistors, capacitors onto the board. India is roughly 3% of the global PCB market — large opportunity for import substitution given that ~70% of PCBs are imported.

Electronics Manufacturing Services — the contract manufacturers that assemble finished electronic products for OEM brands. When you buy an Apple iPhone, Foxconn made it. When you buy a Samsung TV, an EMS made it. India's EMS industry has scaled massively under the PLI scheme (Production-Linked Incentive). Margins are thin (3–7% EBITDA) but ROCE can be high if working capital is managed.

Special chips that handle high voltage and current — used in EV inverters, fast chargers, industrial drives, solar inverters, power supplies, defence radars, railway traction. Three families: silicon (legacy, cheap, lower-efficiency), silicon carbide (SiC — high-voltage, high-temperature), and gallium nitride (GaN — high-frequency, fast switching). The transition from silicon to SiC/GaN is the big growth story.

The final products that consume chips — smartphones, laptops, TVs, cars, factories, telecom, defence systems. India is now the second-largest mobile manufacturing country, ramping data center / server hardware, and pushing electronics export targets. Demand pull from end markets ultimately pulls upstream PCB, packaging, and eventually fab demand.

Specialty chemicals and gases used in fabs and OSATs need extreme care in transport — temperature/pressure control, hazmat compliance, ultra-clean delivery. Less glamorous than chip making but margin-rich and sticky.

Fabs and OSATs need staggeringly stable power and robust industrial infrastructure. A 28nm fab pulls 100+ MW continuously. Power outages or even microsecond glitches destroy in-process wafers worth millions. Add to that: dedicated water lines, gas lines, effluent treatment, road/rail access. EPC + utility plays benefit from this capex.