Micron to Produce Hundreds of Millions of AI Chips in India

Micron will produce hundreds of millions of AI-ready chips annually at its new India facility, boosting global semiconductor supply and diversifying production.

Micron Technology will manufacture hundreds of millions of AI chips annually at a new facility in Gujarat, India, the company announced Wednesday, marking one of the largest semiconductor commitments outside traditional manufacturing hubs in Taiwan, South Korea, and China.

The $2.75 billion plant, set to begin production in late 2026, represents a sharp pivot in how chipmakers are thinking about geographic risk. Micron isn't alone here. But the scale of this particular bet — up to 480 million chips per year at full capacity — signals that India has moved from "interesting possibility" to "critical production base" for memory semiconductors that power AI training and inference.

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Why India, Why Now?

Taiwan produces roughly 90% of the world's most advanced chips, according to the Semiconductor Industry Association. That concentration has made Washington, Brussels, and now corporate boardrooms nervous. Geopolitical tensions, earthquake risks, and the sheer physical limits of Taiwanese infrastructure have triggered a search for alternatives.

India's pitch was simple: land, labor, and a government willing to pay. The country's $10 billion semiconductor incentive scheme, launched in 2021, covers up to 50% of project costs for approved fabs. Micron's Gujarat facility qualified for roughly $1.3 billion in combined central and state subsidies, according to India's Ministry of Electronics and Information Technology.

The timing aligns with broader supply chain restructuring. The CHIPS Act in the U.S. and similar programs in Europe have drawn headlines, but those projects face ballooning costs and skilled-worker shortages. India's advantage isn't just cheaper wages — it's available engineering talent. The country graduates approximately 1.5 million engineers annually, with growing specialization in VLSI design and chip architecture.

"This isn't a hedge. It's a primary manufacturing strategy for our AI memory portfolio," Micron CEO Sanjay Mehrotra told reporters in New Delhi. "India will produce chips that go into data centers from Singapore to São Paulo."

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What Micron's Actually Building

The Gujarat facility focuses on packaging and testing, not front-end wafer fabrication. That's a crucial distinction. Micron will import silicon wafers from its existing fabs in Japan, Singapore, and the U.S., then perform the final assembly steps — stacking memory layers, connecting logic controllers, and quality verification — on Indian soil.

For AI applications, this matters enormously. Modern AI chips like NVIDIA's H100 or AMD's MI300 use high-bandwidth memory (HBM) stacks that require sophisticated packaging. Micron's facility will produce HBM3E and next-generation DDR5 modules, the components that determine how quickly AI models can access training data.

Manufacturing StageLocationAnnual Capacity Wafer fabricationJapan, Singapore, U.S.~2 million wafers Advanced packaging (HBM, DDR5)India (new)480 million units Legacy packagingMalaysia, China~1.2 billion units Testing and validationIndia, Singapore100% of AI memory line

The India plant won't replace Micron's existing network. It will absorb demand growth that older facilities can't handle. AI server shipments are projected to grow 47% annually through 2028, according to Dell'Oro Group. Memory suppliers who can't scale packaging capacity face hard revenue ceilings.

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Who Else Is Betting on Indian Semiconductors?

Micron's announcement follows a $22 billion joint venture between Tata Group and Taiwan's Powerchip Semiconductor, approved in March 2024 for a full-scale fab in Gujarat. That project targets 28nm and 40nm process nodes — older technology by leading-edge standards, but exactly what's needed for automotive chips, power management, and IoT devices.

The pattern is clear: India isn't trying to compete with TSMC's 2nm production. It's aiming for the middle and back end of the supply chain, where margins are thinner but capacity constraints are biting hardest.

CompanyInvestmentProduct FocusProduction Start Micron$2.75BAI memory packagingQ4 2026 Tata-Powerchip$22B28nm/40nm logic chips2027 ISMC Digital$3BAnalog chips2025 Foxconn-Vedanta$20B (stalled)28nm chipsUncertain

Foxconn's partnership with Vedanta hit regulatory roadblocks in 2023 over technology transfer disputes, a reminder that India's semiconductor ambitions aren't guaranteed. But Micron's project has cleared all approvals, with construction already underway at the Sanand industrial park.

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What Does This Mean for AI Chip Prices?

More packaging capacity should, in theory, ease the supply bottlenecks that have kept HBM prices 340% above 2021 levels, according to TrendForce data. But the timeline matters. Micron's first Indian chips won't reach customers until late 2026 — after the next two generations of NVIDIA GPUs have already shipped.

The real price impact arrives in 2027-2028, when multiple Indian facilities hit stride simultaneously. By then, AI model training costs could face downward pressure from memory supply expansion rather than just GPU architecture improvements.

There's a geopolitical angle too. U.S. export controls on advanced AI chips to China have created a two-tier market. Chips manufactured in India, using non-Chinese equipment, face fewer regulatory complications for global shipment. Micron's Gujarat output will carry "India origin" certification that simplifies compliance in sensitive markets.

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The Engineering Challenge Nobody's Talking About

Packaging plants need something India has in short supply: ultra-pure water. A single advanced packaging facility consumes roughly 5 million gallons daily. Gujarat, located in India's most water-stressed region, will require massive desalination and recycling infrastructure.

Micron has committed to 100% recycled water usage for the facility, according to company sustainability filings. Whether that pledge holds under full production load will be watched closely. TSMC's Arizona plant has faced similar scrutiny over water commitments in the desert Southwest.

The talent equation isn't automatic either. Packaging engineers with HBM experience number perhaps 8,000-10,000 globally, concentrated in Taiwan, South Korea, and Japan. Micron has begun recruiting at IIT Bombay and IIT Delhi, but industry sources indicate 200-300 Taiwanese engineers will relocate temporarily to train local teams.

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What to Watch Next

Three developments will determine whether Micron's India bet pays off. First, whether the Gujarat facility can hit its Q4 2026 production target — semiconductor projects routinely slip by 6-12 months. Second, whether HBM4 packaging requirements, expected in 2027, can be handled with the equipment Micron is installing now.

Third, and most consequential: whether other memory vendors follow. Samsung and SK Hynix control 95% of the HBM market combined. Their location decisions for next-generation packaging capacity will either validate Micron's India strategy or leave it geographically isolated.

India's semiconductor ministry has indicated two additional approvals for major projects are pending announcement before year-end. The names remain confidential, but industry observers expect at least one additional memory packaging commitment.

For AI infrastructure planners, the message is clear: chip supply chains are fragmenting by design. The concentration risks that made 2021-2023 so volatile for hardware procurement aren't disappearing overnight. But they're being addressed with actual fabrication commitments, not just policy white papers. Micron's hundreds of millions of chips won't solve the problem. They'll prove whether solving it in India was the right call.

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