India’s Semiconductor Push: Kaynes Plans $1 Billion OSAT Project Under Semicon 2.0

India’s semiconductor ambitions are entering a new phase as Kaynes Semicon plans to expand its chip packaging operations with a proposed $1 billion Outsourced Semiconductor Assembly and Test (OSAT) project in Gujarat under the government’s Semicon 2.0 programme.

The proposed investment could further strengthen Gujarat’s position as one of India’s key semiconductor manufacturing hubs while expanding the country’s capabilities in advanced chip packaging.

Kaynes Eyes $1 Billion Semiconductor Expansion

Kaynes Semicon, a subsidiary of Kaynes Technology India, is planning a new semiconductor packaging project that could involve an investment of around $1 billion. The proposed facility is expected to be located in Gujarat and will be developed under Semicon 2.0, the next phase of India’s semiconductor initiative.

According to recent reports, the project is expected to focus on advanced packaging technologies, with potential applications in areas including LED and micro-LED technologies. An additional investment of approximately $300 million could be considered for the LED component.

The proposal comes as Kaynes scales up its existing semiconductor operations at Sanand, Gujarat.

Existing Sanand Facility Enters Commercial Production

Kaynes is already building a semiconductor backend manufacturing presence in Sanand. The company's first OSAT unit began commercial production in March 2026, initially operating at low-volume capacity and serving customers including Alpha & Omega Semiconductor.

The broader Sanand project was originally approved by the Indian government with an investment of about ₹3,300 crore, with a planned capacity of up to 60 lakh chips per day. The chips are intended for applications spanning automotive, industrial electronics, electric vehicles, consumer electronics and telecommunications.

Kaynes says its Sanand platform is being developed in phases, with multiple manufacturing units designed to progressively increase production capacity.

Focus on Advanced Semiconductor Packaging

OSAT facilities perform critical backend semiconductor functions, including chip assembly, packaging and testing. As semiconductor supply chains become increasingly diversified, advanced packaging has become an important part of the global chip industry.

Kaynes' existing capabilities include technologies such as wire bonding, QFN, DFN, BGA, flip-chip packaging and system-in-package solutions, alongside semiconductor testing services.

The proposed Semicon 2.0 investment could therefore allow the company to move further toward higher-value packaging technologies while expanding its manufacturing scale.

Semicon 2.0 Targets a Broader Semiconductor Ecosystem

India's next semiconductor policy phase is intended to go beyond simply establishing chip manufacturing capacity. Semicon 2.0 is designed to strengthen areas such as semiconductor equipment, materials, research and development, chip design and skilled workforce development.

The government has allocated around ₹1.27 lakh crore for the next phase, while officials have indicated that companies have shown interest in investments of roughly $11–12 billion under the programme.

India's semiconductor market is also expected to expand substantially over the coming decade. A recent EY-IESA report projects the market could grow from approximately $64 billion in 2026 to $200 billion by 2035.

Gujarat Emerges as a Semiconductor Hub

Gujarat has become a major centre of India's semiconductor strategy, with several large projects concentrated in the state.

Kaynes' Sanand facility is part of a broader ecosystem that includes semiconductor packaging and manufacturing projects from companies such as Micron, Tata Electronics and CG Power. The government's semiconductor programme has already resulted in multiple approved projects across Gujarat and other states.

The concentration of semiconductor projects can potentially create additional opportunities for suppliers, equipment manufacturers, logistics providers, technology companies and skilled workers.

What the Kaynes Project Could Mean for India

A $1 billion expansion would represent a significant increase in Kaynes Semicon's semiconductor ambitions. It could help India expand domestic packaging capacity and provide semiconductor companies with additional backend manufacturing options.

The project also highlights an important shift in India's semiconductor strategy: from announcing semiconductor investments to scaling commercial production and developing a complete ecosystem around them.

However, the proposed $1 billion project is still an expansion plan, and its final scope, investment structure, technology mix and implementation timeline may depend on approvals and the company's execution plans.

India’s Semiconductor Industry Enters the Next Stage

Kaynes Semicon's proposed Gujarat expansion comes at a time when India is accelerating efforts to establish itself as a significant player in the global semiconductor supply chain.

With existing facilities moving toward commercial production and new investments being considered under Semicon 2.0, the focus is increasingly shifting toward capacity utilisation, customer qualification, advanced packaging and supply-chain development.

If executed as planned, Kaynes' proposed $1 billion OSAT project could become another important component of India's broader semiconductor manufacturing strategy and Gujarat's growing electronics and semiconductor ecosystem.