Global fab toolmakers are increasingly looking at India as the country steps up its semiconductor manufacturing efforts. Among the industry leaders, Applied Materials, the world’s second-largest semiconductor equipment manufacturer with annual revenue of $26.52 billion, is reportedly considering establishing a manufacturing unit in India. Sources suggest that Tamil Nadu, particularly Taramani, Chennai, is a likely location for this investment.Â
Applied Materials, which lost its top position to Dutch competitor ASML in 2023, is believed to be adopting a “China Plus One” strategy to diversify its operations. With 43% of its sales coming from China, the company is facing pressure due to tightening U.S. export restrictions. Diversifying its manufacturing base outside of China is seen as crucial for maintaining its market position. Establishing a presence in India is a significant move in this direction.Â
In addition to the potential manufacturing unit, Applied Materials is planning to develop an advanced AI-enabled technology center in Chennai, which is expected to create approximately 500 jobs. While the focus of this center remains unclear, industry experts suggest it could serve as a precursor to larger manufacturing operations, contingent upon government incentives under India’s Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS).Â
The company’s expansion into India comes at a time when the country’s semiconductor landscape is gaining momentum. The Indian government has already approved five semiconductor projects, including a $2.75 billion investment by U.S.-based Micron for an assembly and testing facility in Gujarat. Other projects include India’s first semiconductor fab unit in Dholera, Gujarat, by Tata Electronics in partnership with Taiwan’s Power chip Semiconductor Manufacturing Corporation (PSMC), and additional ventures by Tata Semiconductor, CG Power, and Kaynes Semicon.Â
Amid these developments, Applied Materials’ potential investment in India could play a pivotal role in strengthening the country’s growing semiconductor ecosystem. The move is expected to help India reduce its dependency on imports, particularly from China, while bolstering its position as a key player in the global semiconductor supply chain.Â
As India positions itself as a major hub for semiconductor manufacturing, Applied Materials’ entry could provide a significant boost to the sector’s long-term growth and innovation.Â
