India’s Semicon 2.0 and Asia chip rally

India’s Union Cabinet has approved the second India Semiconductor Mission, known as Semicon 2.0, with an outlay of Rs 1.27 lakh crore. The initiative is designed as a six-year programme aimed at accelerating the development of a domestic semiconductor ecosystem.

Semicon 2.0 is structured around several pillars: strengthening chip design capabilities, incentivising production of semiconductor manufacturing equipment and materials, attracting fabrication units, expanding advanced packaging capacity, boosting research and development for next-generation chips, and building a skilled workforce.

The policy adjusts capital expenditure subsidy rates across the value chain. Silicon fabrication units are eligible for a 40% subsidy on capex, while other fabrication facilities can receive 35% support.

Advanced packaging facilities, including ATMP and OSAT operations, are set to receive a 35% subsidy, with conventional packaging units eligible for 25%. The differentiated support is structured to channel incentives to a broad range of semiconductor activities, from front-end fabrication to back-end packaging.

Alongside Semicon 2.0, the Cabinet approved a Mobile Phone Manufacturing Scheme with an outlay of Rs 62,500 crore. This scheme is part of efforts to deepen electronics manufacturing capabilities and complement the semiconductor initiative.

The semiconductor and mobile phone programmes form part of a broader set of seven Cabinet decisions whose combined outlay was reported at around Rs 2.19 lakh crore. Together, these measures signal a substantial commitment to scaling technology and electronics manufacturing in the country.

The policy moves in India come as Asian financial markets show renewed interest in semiconductor-related assets. After softer-than-expected US consumer price inflation data on July 14–15, Asian shares rose and technology stocks led the gains.

MSCI’s Asia Pacific equities gauge climbed about 1.6%, with technology names among the biggest outperformers. South Korea’s Kospi index jumped nearly 6%, reclaiming its position as one of the strongest-performing major stock benchmarks this year.

Chipmakers were central to the rally. SK Hynix shares rose 11% after a sharp advance in its American depositary receipts, underscoring strong investor appetite for semiconductor exposure. Commentary highlighted that attention in regional markets had swung back to the chips sector after a volatile trading period.

India’s expanded semiconductor mission is being announced at a time when global and regional investors are already rotating toward chip-related assets. The emphasis of Semicon 2.0 on fabrication, packaging, materials, and design aligns with the areas that equity markets have been rewarding across Asia.

While the programme is domestically focused, its scale and multi-pillar structure position India within the wider Asia-Pacific semiconductor landscape. The combination of large public outlays and a favourable market backdrop highlights how policy initiatives and investor sentiment are converging around chips.