In The Hague on May 16, 2026, Tata Electronics chief executive Randhir Thakur and ASML chief executive Christophe Fouquet signed a memorandum of understanding while Prime Minister Narendra Modi and his Dutch counterpart, Rob Jetten, looked on. The deal commits ASML, the Dutch company that holds a global monopoly on the most advanced chipmaking lithography machines, to equip Tata's planned $11 billion wafer fab in Dholera, Gujarat, with its deep-ultraviolet tool suite. "India's rapidly expanding semiconductor sector represents many compelling opportunities, and we are committed to establishing long-term partnerships in the region," Fouquet said. Modi posted that the agreement offered "immense opportunities for the youth of our nation."
The detail that separates hype from strategy is the technology tier. ASML's most advanced tools — the extreme-ultraviolet, or EUV, machines used to print the sub-10-nanometer chips inside the newest smartphones and AI accelerators — are not part of this deal. Dholera is being built to produce chips at 28 to 110 nanometers, process nodes that were cutting-edge roughly between 2001 and 2011. Union Electronics Minister Ashwini Vaishnaw has set a target of "first silicon" — the first wafers actually run through the line, a production milestone short of full commercial output — by December 2026, with the plant reaching full operational readiness by 2028. Taiwan's Powerchip Semiconductor Manufacturing Corporation is supplying process technology across the 28-to-110nm range as a transfer partner.
Why Old Nodes Are a Real Business
CSIS senior fellow Sujai Shivakumar put the technical logic plainly: "India is seeking to build out its semiconductor industry by building 12nm chips. ASML can supply the equipment needed to produce them." The commercial case for legacy nodes is genuine rather than a consolation prize — every electric vehicle needs dozens of automotive-grade chips that don't require frontier lithography, 5G base stations run on mature-node silicon, and India's own projected 500 million 5G subscribers by 2030 represent real domestic demand that doesn't care whether the chip inside the phone was made at 3 nanometers or 40. Shivakumar's sharper caveat was about execution, not technology: India's core risk, he said, is "infrastructural" — "significant, reliable, high-quality power, water supplies as well as all levels of skill."
"It may not necessarily make India a semiconductor powerhouse overnight, but it is probably the clearest sign yet that India wants to become a serious semiconductor manufacturing nation." — Harsh V. Pant, Observer Research Foundation
That infrastructure risk is not abstract in India's semiconductor history. In July 2023, Foxconn walked away from a $19.5 billion joint venture with Anil Agarwal's Vedanta group after the Indian government pushed for the venture's European technology partner, STMicroelectronics, to take an equity stake given the project's complexity; STMicroelectronics refused, and the deal collapsed alongside delays in government incentive approval. Two other early bids — Israel's Tower Semiconductor with an Abu Dhabi partner, and a Singapore-based consortium — lapsed without materializing. The program's real pivot point was Micron Technology's approval in June 2023, after which, as one industry retrospective put it, the mission's center of gravity "quietly shifted from chasing leading-edge fabs to building out the unsexy middle of the value chain" — packaging, testing, legacy nodes. Dholera is a direct descendant of that pivot, not a departure from it.
The money behind this second attempt is larger than the first. India's original semiconductor mission committed roughly 76,000 crore rupees, about $9 billion; a proposed second phase would roughly double that to $20 billion, this time covering equipment, chip design, R&D and workforce development rather than fab construction alone. Industry estimates suggest India may need as much as $80 billion in cumulative incentives through 2035 to build a genuinely competitive domestic ecosystem — a figure that puts the current $11 billion Dholera commitment in proportion as an opening bid rather than the whole plan. A parallel, smaller venture is already under construction nearby: India Chip Private Limited, a joint venture between India's HCL and Taiwan's Foxconn on a 60:40 basis, is building a $403 million back-end packaging plant in Greater Noida focused on display-driver chips, expected operational by 2028.
The backdrop to all of this is less reassuring than the ribbon-cutting suggests. Since the outbreak of the US-Israel war on Iran, foreign investors have pulled more than $20 billion out of Indian equities, the sharpest recorded outflow in the market's history, and India's foreign-exchange reserves have slipped from over $720 billion toward roughly $697 billion. None of that is specific to the chip deal, but it is the financial weather India is making an $11 billion capital commitment in. India's only home-grown chip to date, a 32-bit processor called Vikram-32 built for space launches, unveiled in October 2025, is a useful reminder of the distance between where the country's chip industry actually stands and where Thursday's headlines placed it. Dholera does not have to make cutting-edge chips to matter. It has to actually turn on.