Build, Not Buy: The Semiconductor Lesson that Indian AI Experts Must Learn

Carnegie India | Konark Bhandari

The India Semiconductor Mission achieved key milestones by securing domestic packaging and mega-fab partnerships with industry leaders Tata, Micron, and ASML, whereas the India AI Mission focused primarily on procuring foreign compute. Approving a ₹10,372 crore budget in March 2024, government planners successfully assembled 38,000 graphics processing units by late 2025.

However, this heavy reliance on imported hardware exposes the country to unpredictable global export restrictions, such as recent United States regulatory shifts and foreign access limits on Anthropic models. To build long-term technological leverage, national strategies must move beyond application layers built on expensive imported hardware. Netherlands-based ASML demonstrated how targeted research partnerships and specialized hardware investments can overcome dominant market incumbents in critical technology supply chains. Without developing indigenous compute infrastructure and enterprise-grade security frameworks, sovereign digital initiatives remain vulnerable to external trade chokepoints, foreign policy shifts, and severe supply chain disruptions.

Comment

Reliance on foreign semiconductor packaging and compute acceleration limits the sovereign scalability of national technological infrastructure. The integration of ASML lithography tools at the Tata-PSMC Dholera mega-fab demonstrates how physical manufacturing presence underpins true industrial independence. High-end model development remains constrained when state compute allocations depend entirely on offshore hardware imports subject to foreign trade controls. Establishing domestic fabrication capacity alters this strategic dependency by embedding key nodes of the global microelectronics value chain within home territory.

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