India's first chip fab sparks legacy tech debate: Why 28nm could be the country's smartest starting point

India's first semiconductor fabrication plant has drawn criticism for opting to manufacture chips using legacy technology nodes instead of the most advanced processes. But experts argue that the debate is missing the bigger picture.

For a country building a semiconductor ecosystem from scratch, starting with mature manufacturing technology is not a setback — it is a strategic choice aimed at serving India's rapidly expanding electronics and automotive industries while laying the foundation for future capabilities. 

A recent discussion gained traction after a news report suggested that Tata Electronics' semiconductor fab would produce chips using "older technology."

Responding to the report, Kyunghoon Kim, Head of the India & South Asia Team at the Korea Institute for International Economic Policy (KIEP) under South Korea's Prime Minister's Office, argued that the criticism misunderstands both India's industrial strategy and global semiconductor demand. 

Tata's semiconductor plan 

Kim said it is factually incorrect to suggest Tata's semiconductor project has shifted to outdated technology. 

"The Tata fab has always planned to produce chips at 28nm and above. It is therefore incorrect to say it uses far older technology than originally expected," he wrote in a thread on X. 

While advanced chips below 5nm dominate headlines because they power the latest AI accelerators and premium smartphones, the vast majority of semiconductors used worldwide continue to rely on mature manufacturing processes. 

These chips power automobiles, industrial machinery, networking equipment, consumer electronics, power management systems and a wide range of embedded devices where reliability and cost matter more than cutting-edge performance. 

Building a semiconductor ecosystem comes first 

According to Kim, semiconductor manufacturing should be viewed as a long-term industrialisation project rather than a race to produce the world's most advanced chips immediately. 

"Industrialization is fundamentally a process of learning by doing and building an ecosystem," he said. 

Countries that today dominate semiconductor manufacturing — including Taiwan, South Korea and China — spent decades developing skilled workforces, supplier networks, equipment capabilities and supporting industries before reaching the technological frontier. 

For India, establishing fabrication capacity is expected to create expertise across chip design, materials, testing, packaging and manufacturing, strengthening the country's broader electronics supply chain. 

India's electronics boom is driving chip demand 

India's semiconductor ambitions are closely linked to the rapid expansion of its electronics manufacturing sector. 

The country has emerged as one of the world's fastest-growing smartphone manufacturing hubs while automotive electronics, industrial automation, data centres and global capability centres (GCCs) continue to expand. 

The transformation is evident in mobile manufacturing: 

• Mobile manufacturing units increased from 2 in 2014-15 to 300 in 2024-25. 
• Mobile phone imports fell from 75% of domestic demand to just 0.02%. 
• Mobile phone production rose from ₹1.8 lakh crore to ₹5.45 lakh crore. 
• Exports surged from ₹1,500 crore to ₹2 lakh crore. 

According to Kim, increasing domestic semiconductor production is the logical next step in raising local value addition across these industries. 

He also noted that the system-on-chip (SoC) inside a smartphone alone accounts for roughly 14% of the device's bill of materials, making chip manufacturing strategically important for India's electronics sector. 

A trillion-dollar opportunity 

The timing also favours India's ambitions. Industry projections from PwC estimate the global semiconductor market will grow from around $627 billion in 2024 to approximately $1.03 trillion by 2030, representing a compound annual growth rate (CAGR) of about 8.6%. 

Meanwhile, McKinsey projects the market could expand even further to around $1.6 trillion by 2030 under its base-case scenario. 

Much of this growth is expected to come from: 

• Computing and data storage 
• Wireless communications 
• Automotive electronics 
• Industrial applications 
• AI infrastructure and data centres 

Although AI chips attract significant attention, demand for mature-node semiconductors across automobiles, industrial systems and consumer electronics is also expected to remain substantial throughout the decade. 

Why legacy nodes still matter 

Legacy-node chips may grow more slowly than leading-edge processors, but they continue to represent one of the largest segments of semiconductor demand. 

Industry forecasts indicate manufacturing capacity for logic chips at 22-28nm will continue expanding through 2030, while larger-node technologies above 32nm will remain widely used across industrial and automotive applications. 

Kim argues this aligns well with India's domestic demand profile. 

He added that mature-node manufacturing also offers India a competitive advantage because labour costs are relatively lower, especially when combined with government incentives under initiatives such as the India Semiconductor Mission. 

Challenges ranging from supply chains and skilled talent to equipment procurement and high capital costs will remain significant. However, Kim argues that beginning with 28nm — or even 90nm — technology should not be viewed as a weakness.