New Delhi: Even amid its rush to build a domestic semiconductor ecosystem, India’s plan to revive its oldest and only state-owned chip fabrication plant—ravaged by a fire nearly four decades ago—remains stuck. Six months after the government selected three private firms to modernize the Semiconductor Laboratory (SCL) in Mohali, the project is still awaiting key approvals and other decisions, government officials and industry stakeholders said.

On 4 December 2025, Tata Semiconductor Manufacturing, Cyient Semiconductors and Applied Materials emerged as the preferred bidders for SCL’s ₹4,500 crore ($470 million) modernization project.

Mint’s conversations with four officials and industry stakeholders with direct knowledge of the matter revealed a mix of factors weighing on India's ambitions to revive the semiconductor fabrication plant.

One of the factors, an official said, is that the proposal would require the Union Cabinet's nod.

“The government is in the process of submitting the necessary paperwork for the Cabinet's approval,” another senior official directly associated with the approvals told Mint. “The December selection of bidders was to finalize the tender process. We are now in process of submitting the due application to the Cabinet, for approval,” the official said, without specifying a timeline for the same.

This approval is crucial for the SCL project to be given its requisite contracts, a third official said.

SCL's birth and a mystery fire

To be sure, while India is now going all out to catch up, SCL Mohali had been established in 1984, a good three years before global leader Taiwan Semiconductor Manufacturing Co. (TSMC) was founded. The project was designed to make the country a key stakeholder of the semiconductor supply chain that was rising in Asia, as US giants Intel, IBM, Fairchild Semiconductor and Texas Instruments raced to design chips at the boom of personal computing.

However, a mysterious fire in 1989 ravaged most of SCL's machinery, and the fab unit never reached the potential it could have.

In 2023, the Centre first announced an allocation of about ₹10,000 crore to revive, modernize and expand SCL Mohali. While there is no information on the total spends so far, the ₹4,500 crore is expected to be part of the announced allocation.

Where it is stuck

An industry executive said that a key reason for the delay in contract rollout is because of the Centre’s stance on how it will handle a second, separate set of contracts to expand the existing SCL Mohali facility, apart from modernization.

The latter, as Mint reported on 10 July 2025, emerged as a major challenge after the Centre’s talks with the state government of Punjab hit a stalemate over land allocation and pricing.

“The discussions on arriving at a consensus on land parcel allocation, as well as how the extension contracts will be issued and if the tender process may clash with the private entities selected for the modernization process are yet to be sorted out, which has stalled the ability of the private companies to start working on it,” the industry executive cited above said.

This hold-up in the modernization of the 43-year-old semiconductor fabrication unit comes at a time when India is in the process of allocating a fresh outlay of ₹1.25 trillion for a second tranche of the government's semiconductor incentivization plan.

Expected to be notified by the end of 2026, the India Semiconductor Mission 2.0 will provide fiscal support to the industry in building a complete semiconductor value chain in the country: from making semiconductor equipment to owning chip designs and intellectual properties.

“The companies selected as preferred bidders are already engaging with SCL. However, for work to pick up pace, a final order would be needed so that they can also get clarity and make the required capex,” said a second industry executive in the know, adding that the ministry of electronics and IT (Meity) could be waiting for the next project outlay under the Mission to get approved from Cabinet before approving the SCL project.

Queries emailed to Meity, Tata Electronics, Applied Materials and Cyient Semiconductor did not elicit any response until press time.

The upgrade plan

In February, SCL had invited bids to improve its existing 180 nanometre (nm) fabrication line. To be sure, modern-day chips are fabricated at 2nm, while appliances use chips fabricated between 28nm and 100nm. Smaller nanometers mean smaller, faster, and more power-efficient chips.

The 180-nanometer process is an old chipmaking technology, which is still used to make chips for satellites, space and defence systems, medical devices, micro-controllers, power management, etc. In chipmaking, nanometers measure the size of tiny parts like transistors and the spaces between them on a chip.

Enhancement of the existing fab involves replacement of decades-old equipment. The revamp is crucial, as SCL Mohali is expected to offer fabrication, testing and packaging services to domestic chip design startups. Today, only those using 180nm chips can use SCL’s facility, making it of limited strategic use.

In its tender, SCL Mohali said a key objective is to double its chip production capacity—up to 1,500 wafer starts per month (WSPM) from 700 WSPM.

The three preferred bidders have each applied for different expertise areas of the modernization plan. Tata Semiconductor will assess existing utilities and infrastructure, identify gaps, recommend necessary upgrades and manage equipment installation, replacement and maintenance. Cyient will provide technology to manufacture different semiconductor chips, while Applied Materials will provide software and automated systems to run and manage the plant.

Industry stakeholders, meanwhile, believe the delay is mostly on account of administrative reasons, and it does not imply that the project has been put on the backburner.

Ashok Chandak, president of industry body India Electronics and Semiconductor Association, said that SCL Mohali “remains of great strategic importance, and the Centre’s intention is to leverage the facility for creating homegrown chip designs and patents.”

“SCL Mohali will reduce India’s reliance on only foreign and private chipmakers for research, experimental tape-out of chips, and trial manufacturing. The delays are only administrative, and the project should continue to remain a top priority for government’s incentives in technology,” Chandak added.

New Delhi: Even amid its rush to build a domestic semiconductor ecosystem, India’s plan to revive its oldest and only state-owned chip fabrication plant—ravaged by a fire nearly four decades ago—remains stuck. Six months after the government selected three private firms to modernize the Semiconductor Laboratory (SCL) in Mohali, the project is still awaiting key approvals and other decisions, government officials and industry stakeholders said.

On 4 December 2025, Tata Semiconductor Manufacturing, Cyient Semiconductors and Applied Materials emerged as the preferred bidders for SCL’s ₹4,500 crore ($470 million) modernization project.

Mint’s conversations with four officials and industry stakeholders with direct knowledge of the matter revealed a mix of factors weighing on India's ambitions to revive the semiconductor fabrication plant.

One of the factors, an official said, is that the proposal would require the Union Cabinet's nod.

“The government is in the process of submitting the necessary paperwork for the Cabinet's approval,” another senior official directly associated with the approvals told Mint. “The December selection of bidders was to finalize the tender process. We are now in process of submitting the due application to the Cabinet, for approval,” the official said, without specifying a timeline for the same.

This approval is crucial for the SCL project to be given its requisite contracts, a third official said.

SCL's birth and a mystery fire

To be sure, while India is now going all out to catch up, SCL Mohali had been established in 1984, a good three years before global leader Taiwan Semiconductor Manufacturing Co. (TSMC) was founded. The project was designed to make the country a key stakeholder of the semiconductor supply chain that was rising in Asia, as US giants Intel, IBM, Fairchild Semiconductor and Texas Instruments raced to design chips at the boom of personal computing.

However, a mysterious fire in 1989 ravaged most of SCL's machinery, and the fab unit never reached the potential it could have.

In 2023, the Centre first announced an allocation of about ₹10,000 crore to revive, modernize and expand SCL Mohali. While there is no information on the total spends so far, the ₹4,500 crore is expected to be part of the announced allocation.

Where it is stuck

An industry executive said that a key reason for the delay in contract rollout is because of the Centre’s stance on how it will handle a second, separate set of contracts to expand the existing SCL Mohali facility, apart from modernization.

The latter, as Mint reported on 10 July 2025, emerged as a major challenge after the Centre’s talks with the state government of Punjab hit a stalemate over land allocation and pricing.

“The discussions on arriving at a consensus on land parcel allocation, as well as how the extension contracts will be issued and if the tender process may clash with the private entities selected for the modernization process are yet to be sorted out, which has stalled the ability of the private companies to start working on it,” the industry executive cited above said.

This hold-up in the modernization of the 43-year-old semiconductor fabrication unit comes at a time when India is in the process of allocating a fresh outlay of ₹1.25 trillion for a second tranche of the government's semiconductor incentivization plan.

Expected to be notified by the end of 2026, the India Semiconductor Mission 2.0 will provide fiscal support to the industry in building a complete semiconductor value chain in the country: from making semiconductor equipment to owning chip designs and intellectual properties.

“The companies selected as preferred bidders are already engaging with SCL. However, for work to pick up pace, a final order would be needed so that they can also get clarity and make the required capex,” said a second industry executive in the know, adding that the ministry of electronics and IT (Meity) could be waiting for the next project outlay under the Mission to get approved from Cabinet before approving the SCL project.

Queries emailed to Meity, Tata Electronics, Applied Materials and Cyient Semiconductor did not elicit any response until press time.

The upgrade plan

In February, SCL had invited bids to improve its existing 180 nanometre (nm) fabrication line. To be sure, modern-day chips are fabricated at 2nm, while appliances use chips fabricated between 28nm and 100nm. Smaller nanometers mean smaller, faster, and more power-efficient chips.

The 180-nanometer process is an old chipmaking technology, which is still used to make chips for satellites, space and defence systems, medical devices, micro-controllers, power management, etc. In chipmaking, nanometers measure the size of tiny parts like transistors and the spaces between them on a chip.

Enhancement of the existing fab involves replacement of decades-old equipment. The revamp is crucial, as SCL Mohali is expected to offer fabrication, testing and packaging services to domestic chip design startups. Today, only those using 180nm chips can use SCL’s facility, making it of limited strategic use.

In its tender, SCL Mohali said a key objective is to double its chip production capacity—up to 1,500 wafer starts per month (WSPM) from 700 WSPM.

The three preferred bidders have each applied for different expertise areas of the modernization plan. Tata Semiconductor will assess existing utilities and infrastructure, identify gaps, recommend necessary upgrades and manage equipment installation, replacement and maintenance. Cyient will provide technology to manufacture different semiconductor chips, while Applied Materials will provide software and automated systems to run and manage the plant.

Industry stakeholders, meanwhile, believe the delay is mostly on account of administrative reasons, and it does not imply that the project has been put on the backburner.

Ashok Chandak, president of industry body India Electronics and Semiconductor Association, said that SCL Mohali “remains of great strategic importance, and the Centre’s intention is to leverage the facility for creating homegrown chip designs and patents.”

“SCL Mohali will reduce India’s reliance on only foreign and private chipmakers for research, experimental tape-out of chips, and trial manufacturing. The delays are only administrative, and the project should continue to remain a top priority for government’s incentives in technology,” Chandak added.