Cabinet approves Semicon 2.0 with ₹1,27,500 crore outlay

Semicon 2.0: what happened?

Chips sit inside phones, cars, power grids, satellites and weapons, and a few countries make almost all of them. In 2021 India began paying up to half the cost of chip plants to bring them here. That first phase has produced approved plants and the first commercial output. Semicon 2.0 is the second, bigger round, and it goes deeper into the supply chain.

• Semicon 2.0 aims to put India on the world semiconductor map with sustained, long-term support.
• For the first time, makers of machines, materials, chemicals and gases used in chipmaking will be incentivised.
• It seeks silicon, compound semiconductor, discrete component and display fabs.
• It targets the most advanced ATMP technologies.
• R&D will move beyond the 28nm to 110nm nodes India started with.

What are the six pillars of Semicon 2.0?

What did Semicon 1.0 achieve?

• India Semiconductor Mission 1.0 was approved in December 2021 with an incentive framework of ₹76,000 crore, offering fiscal support of up to 50 per cent.
• Twelve manufacturing units have been approved with cumulative investment of over ₹1.64 lakh crore.
• They include one silicon fab, one silicon carbide fab, an integrated Gallium Nitride Micro LED display fab and nine packaging units.
• Micron, Kaynes and CG Semi have started commercial production.
• Twenty-four design projects from startups and MSMEs have been approved for support, and 105 have access to EDA tools.

Where did Semicon 2.0 come from?

• The Union Budget 2026-27 announced India Semiconductor Mission 2.0.
• The February 2026 PIB Backgrounder said the next phase would focus on advanced manufacturing, with a roadmap to 3-nanometre and 2-nanometre nodes.
• It said India aims to be among the top semiconductor nations by 2035.

What do the numbers show?

How does the chip value chain fit together?

1. Design: chip IP and architecture (design startups, EDA tools)
2. Machines, materials, chemicals and gases
3. Fab: wafers made in silicon or compound semiconductor fabs
4. ATMP/OSAT: packaging units
5. End use: autos, telecom, power electronics, aerospace, consumer goods

Why does Semicon 2.0 matter?

What are the challenges in Semicon 2.0?

• Fabs are very costly and slow: the first is due only in 2028.
• India’s nodes so far (28nm to 110nm) are far from the leading edge; the roadmap speaks of 3nm and 2nm.
• Machines, materials and gases are made by a few global firms; drawing them in is hard.
• Other countries offer aggressive incentives, the February 2026 backgrounder noted.

What should be done next on Semicon 2.0?

• Notify Semicon 2.0 guidelines quickly so pipeline projects do not stall.
• Prioritise supply-chain pieces (materials, gases, equipment) alongside fabs.
• Scale design: turn 24 supported projects into products.
• Deepen fab-construction and clean-room skills with industry.

What can Prelims ask on Semicon 2.0?

• Semicon 2.0: Cabinet, 15 July 2026; ₹1,27,500 crore; six pillars.
• ISM 1.0: December 2021; ₹76,000 crore; up to 50% fiscal support.
• 12 units approved (1 silicon fab, 1 SiC fab, 1 GaN micro-LED display fab, 9 packaging).
• Commercial production: Micron, Kaynes, CG Semi.
• ISM 1.0 design support: 24 projects approved; 105 startups/MSMEs given EDA tool access.

How to write about Semicon 2.0 in Mains

Practice question (15 marks, 250 words): Semiconductor self-reliance needs more than fabs. Examine how Semicon 2.0 approaches the full semiconductor value chain.

• Intro: ISM 1.0 (2021) results; Semicon 2.0 outlay.
• Value chain gaps: design IP, equipment, materials, fabs, packaging.
• Six pillars and how they fill gaps.
• Challenges: cost, time, technology access, global competition.
• Conclusion: strategic necessity.