Last year, the semiconductor industry saw two closely timed events — SEMICON India in September and SEMIEXPO Vietnam in November. On the surface, both showed ambition and momentum. A closer look revealed two different approaches to manufacturing. Those differences explain what holds India back.
India — Moving Fast on Chips
The Indian event focused on speed and scale. It featured the Prime Minister's presence, new projects and chips nearing production. Policy drives this approach. It aims to bring chips to market quickly. That is why the initial push focused on assembly and packaging — the faster, simpler and lower value-added stages of the semiconductor chain. India started with the basics and expects the ecosystem to follow.
The global chip shortage and India's recent gains in electronics manufacturing and exports shaped this policy. In electronics, the path was clear. India began with components such as circuit boards, connectors and camera modules, while scaling assembly in parallel.
Semiconductors followed a different path. India moved quickly into chip assembly and packaging, without a matching push into chip components or the equipment used to make chips.
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Vietnam — Building Through Supply Chains
Vietnam's event took a different approach. It focused on linking suppliers, buyers, technical experts, academics, politicians and corporate leaders. Its policies target semiconductor research and development, high-tech manufacturing and design. This has positioned Vietnam as a base for components and equipment. It has drawn companies such as ASML, a Netherlands-based firm that makes lithography machines — equipment used to pattern circuits on semiconductor chips. The Netherlands co-sponsored the event.
Vietnam began building this ecosystem with Samsung from 2009. Samsung had four tier-one suppliers in the country in 2014. It now has more than 280. Over time, Vietnam built a local supplier base through agglomeration economies, infrastructure and skills development. It now supplies core components to firms such as Samsung, Intel and Amkor. This long process matters for companies such as ASML.
ASML and India's Missing Anchor
ASML sources most machine parts from Europe. It now aims to diversify its supply base. Its decision to choose Vietnam for supply chain development and research and development highlights Vietnam's manufacturing discipline, even as ASML continues to source the most critical parts from Europe.
India's role is different. ASML has announced only a customer support office at GIFT City for the Tata-PSMC project in Dholera. This contrast points to a deeper gap. India has lacked a long-running manufacturing anchor for high-tech goods.
India is trying to change this. Budget 2026 supports equipment manufacturing, intellectual property creation and research and development through Semiconductor Mission 2.0. Even so, India remains seen as a demand-led market and services hub — a view policymakers and businesses will need to change.
Why Supply Chains Matter
Both strategies follow their own logic. India is likely to build more fabs, scale chip production and gradually develop supply chains. Vietnam may produce fewer chips but integrate itself into an ecosystem that makes chips and high-end technologies.
There is no single way to build an industrial ecosystem. What matters is whether a country stays relevant as technology changes. Nokia's decline in the smartphone era offers a lesson. India risks becoming replaceable if it remains tied to lower-end work such as assembly, even in future technology cycles. The durable solution lies in building supplier depth, technical expertise and component-level capability that stays useful as technology evolves.
China offers examples. BYD began with batteries for electric vehicles and later applied the technology to grid-scale storage. RoboSense and Hesai built LiDAR — light detection and ranging sensors used to map surroundings — for cars and now apply that expertise to robotics and industrial systems. Once firms build know-how at the component and subsystem level, moving into related industries becomes easier.
That is the real test for India's semiconductor push. It will matter only if today's chips and fabs lead to deeper vertical and horizontal integration in the future.
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