Semicon 2026: India’s semiconductor push turns to localising materials, gases

With multiple semiconductor plants beginning commercial production in India, industry executives are turning their attention to the next stage of the buildout: localising the materials, gases and components needed to keep those factories running.

Executives from Kaynes Semicon, Merck, INOX Air Products and L&T Semiconductor Technologies said at Semicon 2026 that India now has an opportunity to deepen the supply chain around its emerging manufacturing base. They were speaking at different public forums at the three-day event.

“From idea to execution standpoint, we have proven that India can do it,” Kaynes Semicon General Manager Nannie Torries said. “The first level of obstruction is already broken.”

Kaynes' Sanand semiconductor plant began production on March 31, 2026. India now has multiple semiconductor facilities in commercial production.

Materials emerge as next opportunity

Torries pointed to lead frames, moulding compounds and bonding wire as areas with significant localisation potential.

According to figures presented by him, lead frames can account for 5% to 15% of manufacturing costs, moulding compounds 4% to 8%, and bonding wire 2% to 8%.

“This is huge, and this is a big opportunity for us to capture,” he said.

The challenge is qualification. Established semiconductor material suppliers have often operated for decades, while getting a new supplier qualified can take nine to 18 months, Torries said.

Kaynes is also working to qualify multiple suppliers for critical inputs rather than rely on a single source.

Merck sees local materials as key to fab viability

Merck Electronics CEO Benjamin Hein said fab viability will require parallel local investment in ultra-pure semiconductor chemicals and gases, safe materials handling and certified domestic suppliers. The comments reinforce the industry view that semiconductor manufacturing capacity will need to be accompanied by a deeper local materials supply chain.

INOX adding 10 semiconductor gases

The localisation push is also extending to specialty gases. A single semiconductor chip can require more than 500 specialty chemicals and 50 gases, some at purity levels above 99.999%, according to Hein.

Diganta Kumar Sarma, Head – Strategy & Business Development at INOX Air Products, said the company currently manufactures about 12 semiconductor gases in India and is working to add another 10.

Even after the expansion, around 20 to 25 gases required by the industry could continue to come through imports, he said.

“You can't keep on importing gases and chemicals into India” if the aim is to develop a deeply local semiconductor industry, Sarma said.

INOX has already committed Rs 500 crore towards expanding gas purification capacity, building import-linked supply chains and deploying advanced logistics and packaging infrastructure. It has also acquired land in Dholera for an Electronic Specialty Gas Hub to supply ultra-high-purity gases to fabs and OSAT facilities.

Suppliers seek long-term commitments

Sarma said further investment would depend on chipmakers providing suppliers with greater visibility on demand.

“If the fabs and OSATs and ATMPs do not sign binding contracts with the suppliers, people will always hesitate,” he said.

Gas infrastructure in particular needs to be planned alongside semiconductor plants rather than added after production begins.

“You can't bolt on a facility later than the fab has started. You have to do it at the beginning,” Sarma said.

India will need hundreds of semiconductor companies: L&T

The opportunity goes beyond materials and gases.

L&T Semiconductor Technologies CEO Sandeep Kumar said India will need hundreds of domestic semiconductor companies to build a globally competitive industry.

With more than 20,000 distinct semiconductor products globally, no single company can address more than a fraction of the market, he said, making a broad network of specialised domestic companies essential.

Kumar said India already has capabilities in digital compute, analogue and radio-frequency technologies, but needs to deepen expertise in areas including system architecture, high-power chips, memory, optical interconnects and end-to-end supply-chain management.

Semicon 2.0 widens the focus

Government policy is also moving towards this wider supply chain.

Semicon 2.0 includes machines and materials as one of its six focus areas, alongside chip design, fabs, advanced packaging, R&D and talent.

The government has also said it has received $11 billion to $12 billion in investment proposals spanning semiconductor equipment, materials, gases, chemicals and substrates.

The shift marks a progression from getting semiconductor factories built to developing more of what those factories consume locally.

For India, the next phase is therefore not just about adding fabs and packaging plants. It is about building the network of materials companies, gas suppliers, chip designers and specialised manufacturers around them.