India Has 12 Chip Plants — and 90% of What Runs Them Is Still Imported. Semicon 2.0's Real Test.
More than 90% of semiconductor equipment and 85–90% of specialty chemicals and electronic-grade gases consumed by India's chip plants are still imported. Every fab India has built runs on ASML, Applied Materials, Lam Research, KLA, JSR, and Tokyo Ohka Kogyo. Semicon 2.0's machines-and-materials pillar — a 30% flat incentive — is the first explicit attempt to change this.
The TechTimes deep-dive (August 2, 2026) quantified what Vaishnaw’s scoreboard post did not mention: more than 90% of semiconductor production equipment and 85–90% of specialty chemicals and electronic-grade gases consumed by India’s new chip plants are still imported. The supply chain behind India’s semiconductor facilities is almost entirely foreign.
Equipment breakdown: photolithography from ASML (Netherlands); deposition and etch from Applied Materials and Lam Research (USA); metrology and inspection from KLA (USA). Chemistry breakdown: photoresists from JSR and Tokyo Ohka Kogyo (Japan) at parts-per-trillion purity levels that took decades to develop; specialty gases (silane, ammonia, nitrogen trifluoride) at electronic grade from Air Products, Air Liquide, and Linde; packaging materials (polyimide substrates, leadframes, epoxy molding compounds) from Japan, Taiwan, South Korea.
Semcon 2.0’s machines-and-materials pillar introduces a 30% flat incentive on project cost for manufacturers of semiconductor production equipment, specialty chemicals, industrial gases, and advanced materials. This is new — ISM 1.0 had no incentive targeting the supply chain behind the chip plants. Analysts including Kearney partner PS Subramaniam: “Despite investments in fabs and OSAT facilities, a lion’s share of critical inputs into the value chain will still be imported.”
The 30% incentive is a meaningful signal to potential investors. Whether it is sufficient to attract precision laser manufacturers, ultra-high-vacuum engineering firms, and electronic-grade chemistry specialists against suppliers with 40-year head starts is the defining question of Semcon 2.0’s equipment pillar. Taiwan’s equipment and materials ecosystem took approximately 30 years to develop alongside its fab industry. India starts from essentially zero. The September 17–19 Semicon India event is specifically expected to reveal which international equipment and foundry partners consider Semcon 2.0’s incentive structure sufficient to commit capital. That answer — when it comes — will determine whether the machines-and-materials pillar becomes India’s most important semiconductor investment or its most aspirational one.