AI Chip Manufacturing in India: Who Makes Them and What's Next?

If someone told you five years ago that India would be making high-tech AI chips, it might have sounded like a far-fetched dream. Today, though, things have changed fast. We all use smartphones, smart TVs, digital assistants, and even connected scooters—surprisingly, a lot of this tech now relies on AI chips. India, long known for software, has jumped into the hardware race with a fire that’s hard to miss. It's not just about following the global trend; it’s about owning a piece of the AI hardware revolution. But who are the big players in this scene? And what’s fueling India’s AI chip journey?

The Indian AI Chip Story: How Did It Start?

The journey into AI chip manufacturing didn’t happen overnight. For decades, India was labeled "the IT outsourcing hub." Making fancy silicon chips? Never really the vibe—until recently. Two things changed the game: First, the explosion in demand for AI-driven electronics made the whole world hungry for silicon. Think facial recognition, self-driving cars, and voice assistants all running on powerful AI chips. Second, global chip shortages exposed how risky it is to depend on a handful of foreign suppliers. India saw a big opportunity to step up.

It all started gaining speed around 2022, when global supply chains went haywire. Indian policymakers looked at the empty shelves, took notice, and quickly came up with the "Semicon India" program—a massive drive, with over $10 billion set aside to lure chipmakers, boost research, and train engineers. Companies such as Tata Electronics, Vedanta (in collaboration with Foxconn for a period), and ISRO started making waves in the semiconductor manufacturing space, planning to set up world-class fabs (chip fabrication plants). It was a bold move, and it attracted both global giants and fresh homegrown startups.

Talent was never a problem. India already produced tons of engineers, and over half a million students graduate in electronics and related fields every year. What was missing was infrastructure. The government focused on building clean rooms, robust power supplies, and a supply chain ecosystem—things as basic as rare gases, precision machinery, and testing labs. These pieces fell into place slowly, and by 2024, the industry started seeing results. Momentum was especially strong in the AI chip segment, since the world’s biggest tech companies (Google, Nvidia, Qualcomm, and others) were searching for new production bases.

Which Indian Companies Make AI Chips?

This is where it gets interesting. The AI chip scene in India isn’t ruled by just one name—it’s a patchwork of big conglomerates, nimble startups, and research centers cooking up hardware magic. You’ll find a mix of companies designing their own AI chips, others manufacturing chips for global brands, and a few focusing on custom chips for special uses (think automotive or satellite imaging).

Let’s look at the major players making a mark:

• Tata Electronics: One of India’s largest conglomerates. Tata entered the chip-making race hard, signing deals and investing in advanced fabrication units, especially in Tamil Nadu and Gujarat. In 2024, they announced a partnership with a Japanese tech firm to make AI-optimized chips for data centers and cloud services.
• ISRO & SCL: ISRO’s Semi-Conductor Laboratory (SCL) in Mohali may be best known for satellite chips, but they’ve created AI-accelerator chips used in earth observation and space data analysis. These custom processors are ultra-reliable and can run AI models for decoding satellite images in real time.
• Mindgrove Technologies: Started by IIT Madras alumni, this Chennai-based startup drew headlines in 2023 with "SecureRF," an ultra-low power AI chip used in edge devices and IoT sensors. They target security cams, industrial robots, and even traffic systems.
• Incore Semiconductors: Another spin-off from IIT Madras, Incore builds RISC-V based chips with inbuilt AI engines. Their chips help in fintech, consumer devices, and industrial automation, trying to give India a homegrown alternative to ARM and Intel chips.
• Sankhya Labs: Based in Bangalore, they design AI processors for defence and telecom. Their "SignalChai" chips focus on secure, real-time AI at the network edge—this tech helps in everything from telecom towers to military drones.
• Saankhya Labs: Renowned for their software-defined radio, they also produce AI chips for digital broadcast and communication solutions.

It's not just the private sector. The Indian government has set up research groups at IISc Bangalore, IIT Bombay, and CDAC Pune, each building indigenous processor prototypes. These have started showing up in pilot tests for automated language translation systems and smart healthcare monitors. Global companies like Nvidia and AMD have also opened R&D offices in India, where they design and prototype next-gen AI chips, but the actual manufacturing is just starting to happen on Indian soil as production lines shift.

Here’s a table that summarizes a few of the known movers and shakers:

Challenges: Why Isn’t India a Chip Superpower (Yet)?

If India's so gung-ho about making AI chips, why don’t we already see "Made in India" labels on every AI gadget? Short answer: making chips is ridiculously hard, and it’s never just about money or brains. A high-end AI chip—like what powers OpenAI’s GPT models or Google’s latest drone project—has dozens of layers on a tiny piece of silicon, each measured in nanometers. Building such chips needs expensive fabs (billions of dollars), precise clean-room environments (a thousand times cleaner than a hospital theater), and access to rare raw materials. India’s just started building these capabilities. Even Tata’s advanced chip plant, announced in 2024, won’t be rolling out massive quantities before late 2026.

Another obstacle? The manufacturing "stack." Silicon wafers, photolithography machines, testing gear, and chemical supply chains are often controlled by a few global players in the US, Taiwan, Japan, South Korea, and the Netherlands. India’s effort to make everything in-house is a bit like re-inventing a bike while riding it. Engineers and managers are learning on the go. For now, many Indian companies focus on chip design, while actual fabrication is done in Taiwan or the US. Slowly but surely, this is changing as more Indian foundry projects take off.

There’s also the patent game. AI chip designs often run into patent thickets, with big licensing fees and legal threats from international giants. Local firms have to tread carefully, innovate from scratch, and stay nimble so they don’t step on toes. Funding is another issue: while the government has poured billions into the ecosystem, startups still find it tough to raise late-stage capital for scaling up. Big chip projects need patient investors—the payoff comes years (not months) later.

Talent, surprisingly, isn’t the largest gap. While India faces a shortage of fabrication veterans and process engineers, it still produces some of the world’s best chip designers. Many of these folks have experience at Qualcomm, Intel, AMD, and Apple—and some have come back to help build India’s chip ecosystem. Special training programs run by IITs and special semiconductor training hubs have started to plug the skill gaps.

The Road Ahead: What’s Next for Indian AI Chip Makers?

Fast growth and fierce competition—this is the reality of India’s AI chip scene right now. Experts predict that, by 2027, India could have up to five major chip manufacturing hubs, with at least three making AI-focused chips for cloud data, automotive, and edge devices. Tata is expected to lead large-scale production, while startups such as Mindgrove and Incore will likely dominate niche custom chips for specific use cases.

The government’s “Make in India” push is giving special breaks to chip startups—like lower taxes, priority access to electricity, and clearance on land and water. India is also negotiating deals with Japanese, US, and Israeli companies for technology sharing, advanced machinery, and raw material supply. These global tie-ups could cut down the learning curve and help Indian fabs catch up in the next couple of years.

The indirect boost comes from AI adoption across sectors—banks with smart fraud detection, hospitals rolling out AI-powered diagnostics, traffic police with real-time surveillance. Every new use case means more demand for AI chips India can build, both for local consumption and export. The government expects AI chip demand to triple by 2027, driven by smartphones, network gear, EVs, medical devices, and more.

If you’re an entrepreneur or electronics buff, this is a wild time to jump into the action:

• Many Indian universities are now running short-term AI hardware and chip design courses. If you want in, sign up—these are “hot job” guarantees.
• Startups breaking into new chip designs can tap into the India Semiconductor Mission grant, which offers funding for projects up to ₹50 crore.
• If you’re looking for practical experience, Tata, Vedanta, and Saankhya Labs regularly hire interns for AI chip verification and prototyping. Don’t wait for graduation—jump in early.
• If you run a device manufacturing business, see if you can use locally-made chips. It may lower costs and sidestep import headaches.
• Watch for open-source hardware projects: groups like OpenSilicon and segments at IISc are sharing AI chip blueprints to spur innovation and learning.

India’s AI chip journey is just taking off, but the ecosystem is bigger and more energetic than ever. If you peel back your latest "smart" gadget, don't be surprised if, in a couple of years, there’s a chip inside stamped proudly with an Indian logo. And that’ll be more than a point of pride—it’s the start of a new chapter in tech leadership.