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Science & Technology May 05, 2026 4 min read Daily brief · #2 of 39

Cabinet clears two chip plants worth Rs 3,936 crore under ISM; one could be India’s first commercial display facility

The Union Cabinet approved two new semiconductor manufacturing units under the India Semiconductor Mission (ISM), bringing total approved projects to 12 with...

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What Happened

  • The Union Cabinet approved two new semiconductor manufacturing units under the India Semiconductor Mission (ISM), bringing total approved projects to 12 with cumulative investments of approximately Rs 1.64 lakh crore.
  • The two newly approved units together carry a cumulative investment of Rs 3,936 crore and are located in Gujarat — one in Dholera and one in Surat.
  • Crystal Matrix Limited (CML) will establish an integrated compound semiconductor fabrication and ATMP (Assembly, Testing, Marking and Packaging) facility at Dholera Special Investment Region to manufacture Mini/Micro-LED display modules using Gallium Nitride (GaN) technology — marking India's potential first commercial-scale display facility in this segment.
  • A second OSAT (Outsourced Semiconductor Assembly and Test) facility has been approved in Surat with a project cost of Rs 868 crore.
  • The two units are expected to generate employment for approximately 2,230 skilled professionals.
  • These are the last two projects under ISM 1.0, which was approved in December 2021 with an incentive outlay of Rs 76,000 crore.

Static Topic Bridges

India Semiconductor Mission (ISM)

The India Semiconductor Mission was launched in December 2021 under the Ministry of Electronics and Information Technology (MeitY) as a specialised and nodal agency to drive India's semiconductor and display manufacturing ecosystem. ISM 1.0 carries an incentive outlay of Rs 76,000 crore and offers fiscal support of up to 50% of project cost for semiconductor fabs, compound semiconductor facilities, ATMP/OSAT units, and chip design ventures. ISM 2.0, announced in February 2026 with a Rs 1,000 crore allocation, seeks to sustain momentum beyond the initial phase.

  • Approved in December 2021 under the broader India Semiconductor policy
  • Fiscal support: up to 50% of capital expenditure for compound semiconductor fabs and ATMP/OSAT units
  • Total approved ISM 1.0 projects (as of May 2026): 12, covering silicon fabs, compound semiconductors, advanced packaging, and testing facilities
  • Dholera Special Investment Region in Gujarat is a designated greenfield smart city and industrial hub

Connection to this news: The two newly cleared units are the final approvals under ISM 1.0, completing the initial phase of India's push to build a domestic semiconductor supply chain.

Compound Semiconductors and GaN Technology

Unlike conventional silicon-based chips, compound semiconductors are made from combinations of elements such as Gallium Nitride (GaN) and Gallium Arsenide (GaAs). GaN-based devices offer superior power efficiency, high-frequency performance, and thermal tolerance, making them essential for Mini/Micro-LED displays, EV power electronics, 5G base stations, and defense radar systems. India has so far been almost entirely dependent on imports for these advanced materials.

  • GaN (Gallium Nitride) is a wide-bandgap semiconductor with applications in power electronics and high-brightness displays
  • Mini-LED and Micro-LED display technology is next-generation, replacing OLED and LCD in premium devices
  • ATMP (Assembly, Testing, Marking and Packaging) and OSAT are downstream semiconductor manufacturing stages — critical for supply-chain self-reliance
  • India's first commercial GaN-based display facility, if operational, would mark a structural shift from pure assembly to integrated manufacturing

Connection to this news: The Dholera facility would be India's first commercial-scale compound semiconductor and display manufacturing plant, addressing a critical gap in the domestic value chain.

Semiconductor Supply Chain and Economic Security

Semiconductors are embedded in virtually all modern technology — from consumer electronics and automobiles to defence systems and telecommunications. The global chip shortage of 2021–23 exposed vulnerabilities in countries dependent entirely on foreign supply. The US CHIPS and Science Act (2022), EU Chips Act (2023), and Japan's semiconductor push reflect a global race to re-shore chip manufacturing. India's ISM positions the country to reduce import dependence and develop export capability.

  • India's electronics imports, including semiconductors, have exceeded $100 billion annually in recent years
  • The Production Linked Incentive (PLI) scheme for electronics and semiconductors complements ISM
  • Dholera SIR is one of India's first greenfield industrial smart cities developed under DMIC (Delhi-Mumbai Industrial Corridor)

Connection to this news: Approving ATMP/OSAT units is a strategic step — packaging and testing capacity is often the first rung India can realistically climb in the global semiconductor ladder.

Key Facts & Data

  • Total ISM 1.0 incentive outlay: Rs 76,000 crore (approved December 2021)
  • Total cumulative investment across 12 approved ISM projects: approximately Rs 1.64 lakh crore
  • New approvals: Rs 3,936 crore cumulative investment; Rs 868 crore for the Surat OSAT unit
  • Expected skilled employment from two new units: 2,230 professionals
  • Location: Dholera Special Investment Region (display/compound semiconductor) and Surat (OSAT) — both in Gujarat
  • ISM 2.0 budget allocation: Rs 1,000 crore (February 2026)
  • Fiscal support under ISM for compound semiconductor/ATMP facilities: 50% of capital expenditure
On this page
  1. What Happened
  2. Static Topic Bridges
  3. India Semiconductor Mission (ISM)
  4. Compound Semiconductors and GaN Technology
  5. Semiconductor Supply Chain and Economic Security
  6. Key Facts & Data
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