India is making a huge bet on semiconductors. The country has committed over ₹1.6 trillion to build a domestic chip industry. This ambitious plan faces serious challenges. The situation resembles Intel's recent struggles more than Nvidia's spectacular success.
Intel's Downfall Offers Hard Lessons
Semiconductor giant Intel provides a cautionary tale. The company has cut 23% of its global workforce in just two years. That means nearly 30,000 people lost their jobs. This happened despite Intel receiving billions in government subsidies to boost manufacturing.
CEO Lip-Bu Tan recently admitted Intel is not among the top ten semiconductor companies by valuation. The market already knew this truth. Intel now holds less than 1% of the discrete GPU market. Nvidia dominates this space with 92% share. These GPUs power the current AI revolution.
The brutal lesson is clear. Throwing money at semiconductor manufacturing cannot solve fundamental technology and execution problems. For India, Intel's experience offers uncomfortable truths.
Nvidia's Rise Shows Different Path
Nvidia's story contrasts sharply with Intel's decline. Nvidia did not stumble into AI chip dominance by accident. The company built toward this goal for over a decade before the generative AI boom exploded.
While Intel maximized quarterly profits from its CPU monopoly, Nvidia took massive risks. It invested heavily in specialized software and chips that seemed like niche projects at the time. These investments eventually became the foundation for the AI revolution.
Nvidia founder Jensen Huang famously called it a "zero-billion-dollar opportunity." Nobody could predict when commercial value would materialize. By the time ChatGPT created explosive demand for AI training chips in late 2022, Nvidia had spent fifteen years developing exactly what the market needed.
India's Strategy Faces Fundamental Flaws
India's semiconductor strategy reveals similar flaws to Intel's approach. The Production Linked Incentive scheme promises to cover up to 50% of fabrication costs. This subsidizes construction as if buildings alone create competitiveness.
The Tata-PSMC facility targets 28 nanometer nodes. This is workhorse technology that Taiwan Semiconductor Manufacturing Company mastered back in 2011. While these chips remain essential for local electronics, the global frontier keeps advancing.
By 2027, when India reaches volume production, the global frontier will likely have shifted to 1.6 nanometer technology. India isn't just starting late. The gap continues widening even as the country builds its capabilities.
Workforce Alone Cannot Solve The Problem
Intel's workforce reduction shows why hiring alone cannot fix semiconductor challenges. Despite having thousands of experienced engineers, Intel consistently trails TSMC in yield rates and process reliability.
Industry veteran Burn J. Lin identifies the core issue. In modern semiconductor manufacturing, knowing the technology is completely different from successfully producing it. TSMC's advantage comes from "organizational muscle memory." This develops only through decades of iterating at scale.
India's challenge mirrors Intel's situation but is significantly steeper. Intel at least possessed decades of institutional knowledge. India lacks the complete ecosystem of specialized suppliers, equipment manufacturers, and experienced technicians that Taiwan cultivated over forty years.
Missed Opportunities Haunt India's Efforts
India has a lack of foresight to blame for current challenges. In the mid-1990s, Vinod Dham left Intel after leading successful Pentium processor development. He made frequent trips to India during this period.
At that moment, India should have made him an offer he couldn't refuse. The country needed someone to lead its semiconductor program. Taiwan did exactly this with Morris Chang in 1987. That move created the world-beating TSMC.
India's failure to envision a future around a pioneer like Dham condemned the country to semiconductor backwaters. Even five years ago, as chip criticality became obvious, India should have made a bold offer to TSMC. The country needed to convince the company to establish a local plant.
Instead, India reached out in late 2021. By then, TSMC had already committed to the United States, Japan, and Germany. The approach was too little, too late.
Design Strength Offers Potential Path Forward
Having lost the manufacturing race, India must pick its next moves carefully. The country already hosts 280 academic semiconductor institutes and 72 chip design startups. Design is where Indian talent has demonstrated global competitiveness.
While manufacturing investments remain necessary given import intensity, they shouldn't come at the expense of looking ahead. India needs to balance current needs with future opportunities.
The Fundamental Strategic Problem
Ultimately, India is pursuing a settled market while industry winners move toward "zero-billion-dollar" frontiers. By subsidizing 28 nanometer nodes from 2011, the PLI scheme treats semiconductors like a twentieth-century commodity.
This approach ignores that semiconductors require high-conviction technology bets. If India continues prioritizing gaps of the past over creating markets of the future, the country will remain a technological follower.
The harsh reality is becoming clear. No amount of capital can close a gap that widens by the second. India's semiconductor journey faces steep challenges that require fundamental strategic rethinking.
