Govt tracking chip supply snags as units come alive

The Centre is closely monitoring global supply constraints at a time when it expects the import of integrated circuits (ICs) or semiconductor chips to sharply expand throughout FY27 as assembly, testing, marking and packaging (ATMP) units under the India semiconductor mission (ISM) begin production this year, officials told ET.

ICs including processors, controllers and memories, are now the 3rd largest single import item for India. In April-December of FY26, the value of imported chips rose to $12.62 billion, making it the largest concentrated cost within India's inbound trade after imported crude oil and gold, official figures show. Imports widened 12.79% over the same period. Officials hinted that government projections indicate chip imports will top the overall $15.14 billion worth of imports seen in the 12 months of FY25, as well as raise the share of chips in the total import basket, which stood at 2.09%.

An IC is a small wafer of semiconductor material (usually silicon) that hosts an entire network of interconnected electronic components. Called the brains of any modern electronic system, thousands of chips are now integrated in modern appliances, as manufacturers move away from using discrete components-individual transistors, resistors, and capacitors, which were earlier soldered together. This pivot has exponentially pushed up the strategic importance of chips in recent years considering that ICs were the 7th highest imported item as recent as FY24, officials pointed out.


"One plant has begun production under ISM, while three others will begin production this year. These, and other major investments, are crucial to India's semiconductor journey. The government has provided all support to ensure they are a success. We are keeping an eye on the global flow of chips at a time when high demand from many nations is clogging supplies in some cases," an official with the ministry of electronics and information technology (MeitY) said.

Last month, Prime Minister Narendra Modi inaugurated the commercial production from Micron Technology's ₹22,516 crore plant in Gujarat's Sanand. Officials have said the units of CG Power, Kaynes Technology, and Tata Electronics, are also set to begin production soon.