Applied Materials sees no demand risk for India's chip push; ecosystem, infrastructure the real tests

India’s semiconductor ambitions face a bigger challenge of building the ecosystem and infrastructure for the fabs, according to Avi Avula, president, Applied Materials India, who believes demand is not the hurdle.

“From a demand standpoint, I do not think there is an issue, whether it is Indian chip consumption or global demand. The ecosystem and the ability to build the required infrastructure are critical,” Avula told ET AI during SEMICON India 2026.

He added: “With more than 100 fabs being built around the world today, even the companies that construct fabs are constrained.”


The government estimates peg India’s semiconductor consumption to reach as much as $110 billion by 2030, up from $45-50 billion in 2025.

Avula's comments come after the US-based semiconductor equipment maker announced a $5 billion investment over the next decade under its “Applied Materials India Vision 2035”. Speaking at the event, Prabu Raja, president, Semiconductor Products Group, Applied Materials, said the plan comprises three pillars. “One, deepen our R&D in India; two, accelerate the ecosystem in India; three, grow future talent in India.”

A new research park near Bengaluru is at the heart of this plan. “Today, we are committing to a new 140-acre advanced semiconductor research park, bringing together cleanroom capabilities, engineering expertise, and collaborative R&D with customers and suppliers,” added Raja.

What the $5 billion covers

Avula said most of the money will go into research-led activity. “Applied Materials is fundamentally an innovation and R&D-driven company. When we talk about investing in India, we are investing in innovation capabilities, engineering talent and the ecosystem needed to accelerate semiconductor technology development from India for the world.”

For Applied Materials, the expansion builds on its $400 million investment announcement for an engineering hub in Bengaluru in June 2023. Avula told ET AI the new centre would include that earlier plan, with additional engineering capabilities and work to assess suppliers.

The land acquisition is complete following the board’s support, Avula said, adding that individual phases would require separate approvals.

“We have already acquired the land. That is a done deal and the decision has the board’s support. As we move forward, we will take up each phase separately because $5 billion cannot be one item,” Avula clarified, adding the company does not yet have specific timelines for construction.

He said the firm has already conducted research in a 300-mm cleanroom, a controlled environment used to work on silicon wafers, and wanted to expand that capability at the new site.

“We now want to scale it at a different site and on a much larger scale. When it is eventually built, it should be comparable with the best in the world, with no difference.”

Avula said Applied Materials’ expansion would combine spending on R&D facilities and operations, with efforts to bring partners to its campus near the Bengaluru airport.

Supply chain before assembly

Avula said the lack of local suppliers is slowing even research work. “Without a supply chain here, I have to import every component, even for R&D, which is very difficult. If you want to operate at a large scale and have to source parts from Japan, Korea or the US every time, it delays everything.”

Indian suppliers still have a long way to go, according to Avula. “We have a supply chain and are sourcing locally, and while the supplier ecosystem is still evolving, we see strong potential for it to take on increasingly sophisticated roles over time,” he said, adding the company expects more than 100 India-based suppliers for future collaboration.

This is another reason why the final assembly of equipment is not part of the plan for now. “It does not make sense to import 98-99% of a system into India, assemble it here and then ship it to Korea, Japan or Taiwan, where the demand is,” he explained.

Avula said the company's manufacturing involves final assembly, testing, evaluation and shipment to the customer.

Elaborating the challenge at hand, he said: “That is the least difficult part of the entire build. Localising the supply chain is a more urgent requirement. Once that is in place, it becomes much easier to consider manufacturing.”

Domestic market still small

In the short-term, Avula said, domestic fab volumes will be very small. “India has announced one wafer fab, more than 100 fabs are being built worldwide today. From that perspective, India is at the beginning of its semiconductor manufacturing journey, with a tremendous opportunity to build long-term capability and scale.”

Avula believes India needs more chip factories for domestic and global markets.

“Tata has announced a $11-billion fab. Once it is fully built, based on our market share, we would expect to have some amount of that opportunity,” he said. “When the next fab comes, we will also look to have that opportunity. That is not something we can control. It depends on which companies establish fabs here and seek our support.”