Applied Materials’ $5 billion India plan to build chip R&D lab, supply chain
NEW DELHI: US semiconductor equipment maker Applied Materials Inc. plans $5 billion investment in India to build a semiconductor research and development laboratory and develop a local supply chain to support products it builds globally, its top India executive told Mint.
“We’ll use the $5 billion investment to build a lab here, a clean room, where we develop products in India,” Prabu Raja, president of the semiconductor products group, said in an interview. “This means that we’ll also need to develop a lot of engineering expertise, for which we will be hiring a lot of people for semiconductor product development.”
Raja spoke to Mint on the sidelines of Semicon India 2026 at New Delhi’s Yashobhoomi convention centre on Thursday. The event saw Tata Electronics, which is developing India’s first commercial chip fabrication plant, sign seven memorandums of understanding with semiconductor supply-chain companies.
Applied Materials announced its $5 billion investment over 10 years at the event, making it the company’s largest investment commitment in India.
The company plans to use the capital to develop a chip-engineering supply chain closer to its product-development operations, Raja said. “Right now, most of the supply chain is global and getting the parts from outside takes a lot of time,” he added.
Applied Materials, currently valued at $332 billion, is among the world’s 50 biggest companies by market cap. Its India entity was established in 2003. As per its latest filings with Ministry of Corporate Affairs accessed via Tofler, Applied Materials reported ₹2,708 crore in India revenue, up 12% in FY25.
In June 2023, Applied Materials announced a $400 million investment to establish an engineering hub in Bengaluru. With the new investment, Raja said the company plans to expand its chip-design and product-development activities in India.
“If you have a supplier closer to where you develop products, it is beneficial. If a remote supplier develops something, they give it to you. If it doesn’t work, you’ll have to go through a prolonged product development process—which takes a lot of time,” he said. “If the supply chain and us work in one place together, we reduce the number of iterations and increase the product development pace.”
The development of India’s semiconductor supply chain has also emerged as a key focus in the government’s efforts to attract global chip investments. In an 18 August address to the press in New Delhi, S. Krishnan, secretary at the Ministry of Electronics and Information Technology (MeitY), said India’s semiconductor supply chain “is attracting increasing global investments as more and more global manufacturers set up shop here—creating an ecosystem as the industry develops.”
Semiconductor product-development cycles can take as long as 10 years, Raja said. India’s pool of semiconductor engineers could help accelerate the process, but engineers need to be trained and encouraged to develop specialised capabilities, he added.
Raja’s comments came as global semiconductor demand continues to rise, driven by the rapid expansion of artificial intelligence infrastructure. The global semiconductor industry has already crossed $1 trillion, while the semiconductor equipment market is expected to exceed $150 billion this year, he said.
“We’ve tracked a lot of how many fabs are coming up. We see more than 100 fabs coming up worldwide,” Raja said, pointing to opportunities for Applied Materials as chipmakers seek to address a memory-chip shortage and rising demand.
Applied Materials is also seeing strong demand from customers, with some deals extending over more than two years, Raja said. The company has guided for nearly 40% growth in revenue this year. Its global operating revenue stood at $9.12 billion in the May–July 2026 quarter, up 25% from a year earlier.
