India’s IT Giants Venture into Semiconductors and Electronics: A Strategic Shift
In a significant move reflecting the evolving landscape of technology, India’s leading IT firms are increasingly investing in the semiconductor and electronics sectors. This strategic diversification comes amid a robust governmental push to establish India as a global hub for semiconductor manufacturing and design. By leveraging their engineering expertise and research capabilities, these companies aim to enhance their service offerings and tap into the burgeoning market.
Major Investments and Partnerships
Wipro, one of India’s foremost IT service providers, recently made headlines by acquiring a stake in Harman’s Digital Transformation Solutions business for $375 million. This deal, expected to finalize by December 31, 2025, also establishes a multi-year strategic partnership involving Wipro, Harman, and Samsung. This collaboration is indicative of Wipro’s commitment to expanding its footprint in the electronics sector.
In addition to Wipro’s endeavors, HCL Group is making strides in semiconductor manufacturing by collaborating with Foxconn to establish a fabrication plant in Noida. This ambitious project, which received approval from the Union Cabinet in May, involves an investment of ₹3,706 crore. Such initiatives underscore the growing importance of semiconductor manufacturing in India’s economic landscape.
Expanding Capabilities in Semiconductor Design
Infosys, another major player in the IT sector, has also made significant moves by acquiring Bengaluru-based semiconductor design firm InSemi. Meanwhile, mid-sized IT services company Cyient has launched its semiconductor subsidiary, Cyient Semiconductors, aimed at providing comprehensive services in the semiconductor domain. Similarly, L&T Semiconductor Technologies is set to support its parent companies, L&T Technology Services and LTIMindtree, in their semiconductor ventures.
Tata Consultancy Services (TCS), a bellwether in the IT industry, has introduced chiplet-based system engineering services designed to accelerate semiconductor innovation. TCS has partnered with Tata Electronics, which aims to produce India’s first domestically manufactured chips by 2026. This initiative is bolstered by a collaboration with Taiwan’s Powerchip Semiconductor Manufacturing Corp and plans for facilities in Gujarat.
The Rationale Behind Diversification
Experts suggest that this diversification strategy is a prudent move for IT firms, particularly in light of the challenges facing the industry. According to Pareekh Jain, founder and CEO of technology insights platform EIIRTrend, Indian corporates are investing in the semiconductor ecosystem to enhance their capabilities in design, outsourced semiconductor assembly and test (OSAT), and wafer manufacturing. This strategic pivot is not only about entering a new market but also about mitigating risks associated with their core business.
Despite ongoing challenges, such as U.S. tariffs impacting trade, India is determined to establish itself as a key player in the global semiconductor landscape. The semiconductor sector is experiencing rapid growth, with semiconductor engineering expanding at over 20% annually, making it an attractive area for service providers.
The Role of Artificial Intelligence
As these IT companies venture into the semiconductor space, they are also banking on advancements in artificial intelligence (AI) and generative AI. N Chandrasekaran, chairman of Tata Sons, emphasized in TCS’s annual report for 2025 that the widespread adoption of generative AI represents a significant shift in technology, driven by advancements in semiconductors, cloud computing, and other innovative fields.
Industry executives believe that companies with robust engineering service portfolios are well-positioned to transition into semiconductor research and development. Cyient Semiconductors, for instance, aims to provide end-to-end application-specific integrated circuit (ASIC) design services, supporting India’s journey toward self-reliance in the semiconductor ecosystem.
Market Potential and Future Outlook
The global semiconductor market is currently valued at approximately $600 billion and is projected to reach $2 trillion by 2032. In contrast, the Indian semiconductor market, estimated at around $45-50 billion for 2024-2025, is expected to grow to $100-110 billion by 2030. This growth trajectory presents a compelling opportunity for Indian IT firms to capitalize on the expanding market.
While the entry of IT companies into the semiconductor sector is not entirely new, the pace of expansion has accelerated in recent years. HCLTech’s acquisition of Sankalp Semiconductor in 2019 and Tech Mahindra’s acquisition of Cerium Systems in 2020 are examples of earlier moves into this space. More recently, Wipro and HCLTech have announced partnerships with Intel Foundry, further solidifying their commitment to semiconductor development.
The Importance of Semiconductors in Modern Technology
The semiconductor industry is crucial for the design and production of micro-components such as chips, transistors, and integrated circuits. These components form the backbone of modern electronic devices, including smartphones, computers, automotive systems, and advanced computing technologies. As the demand for high-performance semiconductor solutions continues to rise, the role of Indian IT firms in this sector becomes increasingly vital.
Conclusion
India’s top IT firms are strategically positioning themselves in the semiconductor and electronics sectors, driven by a combination of government support and market potential. As they leverage their engineering expertise and forge partnerships, these companies are not only diversifying their portfolios but also contributing to India’s ambition of becoming a global semiconductor powerhouse. With the market poised for significant growth, the future looks promising for both the IT sector and the broader Indian economy.
