Introduction: The Semiconductor Crisis and India’s Response

The COVID-19 pandemic exposed critical vulnerabilities in the global semiconductor supply chain. Industries worldwide from automotive to consumer electronics experienced massive production slowdowns due to an unprecedented chip shortage. For India, which has long relied on semiconductor imports, this served as a wake-up call. Recognizing the strategic importance of semiconductor self-sufficiency, the Indian government launched significant initiatives to develop a domestic semiconductor ecosystem, including a landmark capital subsidy of ₹76,000 cr., one of the largest in Indian industrial history, to incentivize semiconductor manufacturing and attract key players into the sector.

 

The Legacy of Kaynes Technology

Established in 1988, Kaynes Technology is a pioneer in the Electronics Manufacturing Services (EMS) sector with over three decades of proven excellence. Since its IPO in November 2022, the company has consistently outperformed industry expectations. Kaynes has made significant contributions to India’s electronics growth story by working on prestigious government and space-tech projects, like CDAC (High power Computing Servers) and ISRO’s Chandrayaan-3 mission, further solidifying its position as a reliable and innovative partner in critical national endeavors.

With a vision to become a fully integrated electronics powerhouse, Kaynes identified a unique opportunity to parallelly expand into semiconductor OSAT (Outsourced Semiconductor Assembly and Test) and HDI Bare-board manufacturing, marking a strategic shift towards a holistic electronics ecosystem.

 

Challenges in Developing the Semiconductor Ecosystem

 

In the post-COVID era, even with strong government backing, India’s journey to becoming a semiconductor hub comes with several formidable challenges:

Capex : Setting up semiconductor fabrication and OSAT (Outsourced Semiconductor Assembly and Test) facilities requires substantial capital investment, often running into billions of dollars. This makes the semiconductor industry one of the most capital-intensive globally. The long gestation period, typically 5 to 7 years before achieving profitability, adds to investor hesitation. A significant portion of the capital is allocated towards acquiring advanced manufacturing equipment, such as photolithography machines, which alone can account for 60–70% of the total cost. Additionally, expenses related to licensing global technologies, developing skilled talent, establishing R&D centers, and maintaining cutting-edge infrastructure further strain capital resources. Although the Indian government has introduced initiatives like the Semiconductor Mission and Production-Linked Incentive (PLI) schemes to reduce the burden, the sheer scale of investment required remains a major challenge in building a robust domestic semiconductor ecosystem.

Infrastructure Development : Setting up advanced semiconductor packaging and testing units demands significant capital investment and access to global technologies. Recognizing this, the Indian government is actively enabling infrastructure growth with strategic initiatives across Gujarat, including the development of ports, improving multi-modal logistics, and enhancing road and expressway connectivity to facilitate the movement of high-value semiconductor equipment and materials. Industrial parks, reliable power and water supply, and support from state-level single-window clearances are also helping fast-track projects like Kaynes Semicon’s OSAT facility ensuring that India builds a globally competitive semiconductor ecosystem from the ground up.

Skill Development : The semiconductor industry requires highly specialized talent, and India has long faced a gap in producing industry-ready professionals. To address this, Kaynes Semicon is actively building its talent pool development program by collaborating with leading institutions. These partnerships include local Gujarat universities like Ganpat University and IIT Gandhinagar, as well as universities in other regions, such as SASTRA University in Tamil Nadu. We also work with established institutions like BITS Pilani – Hyderabad, IIT Bombay, Diploma Institutes, and IESA to create tailored training programs focused on semiconductor packaging and OSAT. To further enhance the learning experience, Kaynes Semicon organizes online courses delivered by our engineering team, providing practical and up-to-date knowledge. Government initiatives like Semicon India Future skills and the Design Linked Incentive (DLI) Scheme are also actively supporting this effort by funding skill development, enabling academia-industry partnerships, and setting up Centers of Excellence, helping create a robust talent pipeline within the country

Supply Chain Limitations : India’s semiconductor supply chain is still maturing, with limited domestic vendors for raw materials, tools, and sub-components. However, the government is actively addressing this gap by incentivizing upstream and downstream players, promoting local sourcing, and offering benefits under the Semicon India Program to build a resilient, end-to-end supply ecosystem. Additionally, collaborations with global semiconductor firms and the development of Electronics Manufacturing Clusters (EMCs) are further enabling the growth of indigenous suppliers, paving the way for just-in-time, high-volume production without heavy reliance on imports.

 

Kaynes Semicon’s Vision to Reality: Pioneering India’s OSAT Revolution.

 

India, long recognized as a service-dominated economy with over half of its GDP coming from services, is now experiencing a major transformation. The semiconductor revolution calls for bold investments in high-tech manufacturing, especially in capital-intensive areas like chip packaging and testing. Kaynes Technology has stepped up to this challenge through its wholly owned subsidiary, Kaynes Semicon, setting the foundation for a new era of leadership in semiconductors.

As one of India’s leading EMS (Electronics Manufacturing Services) players, Kaynes Technology’s foray into OSAT is a natural and strategic extension an organic move toward backward integration that strengthens its value chain and enhances control over quality, timelines, and innovation.

As global industries look to diversify manufacturing operations, the “China +1” strategy has emerged as a key shift. India is quickly becoming a strategic alternative. India-based solution for semiconductor packaging and testing, helping global clients reduce dependency on China and strengthen supply chain resilience.

In 2023, Kaynes Semicon became the first Indian company to apply for the Government of India’s OSAT capital subsidy. It was a bold and pioneering step that demonstrated the company’s clear vision and leadership. Just months after applying, Kaynes secured land and infrastructure approvals in Gujarat, moving swiftly toward turning that vision into reality. But Kaynes Semicon is more than just a semiconductor facility. With built-in design capabilities and global partnerships, it’s on track to create one of India’s most forward-looking semiconductor ecosystems. The project is progressing in phases, with a mission to help India become self-reliant in the global semiconductor space.

Delivering Full-Spectrum Semiconductor Solutions

Kaynes Semicon is building end-to-end capabilities to support the entire semiconductor value chain. The offerings include:

Advanced research and development in packaging, with a special focus on Co-packaged optics, 2.5 D, 3D and heterogeneous integration.

Comprehensive OSAT services for multiple industries.

Dedicated testing services to ensure high product quality and reliability.

Expertise in reliability and failure analysis.

System-level integration, including load board design and manufacturing.

Original design manufacturing (ODM) for customized box-build solutions.

 

Sanand OSAT Facility: Shaping the Future

 

At the core of Kaynes Semicon’s journey is its upcoming facility in Sanand, Gujarat. Spanning 18.4 lakh sq. mtr., this plant will be among the most advanced semiconductor assembly and testing units in India. It’s designed not just for current needs but also for the future demands of a rapidly evolving industry. We are investing a CAPEX of more than INR 3300 Cr., which enable us to have a state of art Reliability and Failure Analysis lab, Test services for Digital/Analog & Low/high power (Chips).

Here’s what makes it stand out:

Embracing cutting-edge packaging technologies like wafer-level packaging and system-in-package (SiP) to replace outdated models.

Built for high-volume production across sectors such as automotive, aerospace, industrial automation, and consumer electronics.

A dedicated pilot line will allow for rapid prototyping and accelerated go-to-market for new semiconductor packaging solutions.

Focus on IPM (Integrated Power Module) packages, enabling Kaynes Semicon to cater to growing demands in power electronics and electric mobility.

Strong global collaborations to bring in best practices and technology transfer from established international partners.

A clear, phased growth strategy: The first phase is set to begin qualification by mid-2025, with full commercial operations targeted for the end of 2025.

Focus on reducing import dependence by strengthening domestic supply networks and encouraging semiconductor innovation within India.

 

Conclusion: A New Era for India’s Semiconductor Industry

 

Kaynes Semicon is not just an EMS company, it’s a symbol of India’s bold new direction in the global tech economy. With deep roots in electronics manufacturing, strategic foresight, and strong government support, Kaynes is uniquely positioned to lead India’s transformation from a service-focused economy to a semiconductor powerhouse.

As we move toward 2026 and beyond, Kaynes Semicon will play a pivotal role in shaping a resilient, future-ready India, aligned with the global supply chain and technological evolution.