Can India Have Self Reliance In Memory Chips? Need Of the Hour To Navigate Crisis

The global industry is hit by a shortage of memory chips. Can India's semiconductor aspirations find self reliance in memory chips?

India wants to be a global chip major. The country's overall strategy, under the India Semiconductor Mission (ISM), aims to create a full end-to-end supply chain from design to fabrication, testing, and packaging for various chips, including memory and logic chips.

"Achieving total self-sufficiency in memory chips is difficult in the near- to mid-term. India's current leverage lies not in manufacturing the chips yet, but in its massive consumption power and its growing role as a global assembly hub," said Neil Shah, industry analyst & co-founder at Counterpoint Research.

Finding the Sweet Spot

India aims to reduce its overall dependence on chip imports, secure them for strategic sectors, and capture a bigger share of the global electronics market. However, there is a disparity in buying power that India must navigate: Indian enterprises building AI datacenters currently lack the massive negotiating weight of global hyperscalers.

"While global giants can secure favorable terms with foundries and system integrators, Indian players will face stiffer competition for procuring datacenter solutions with cutting-edge compute and advanced memory components. To navigate this, India must leverage its aggregate demand as a 'price-conscious giant' to secure better supply chain priority," Shah explained

Globally, memory prices are likely to rise 30 per cent in Q4 2025 and possibly 20 per cent more early next year, on top of 50 per cent price increases experienced year to date, according to Counterpoint Research report.

The current indications suggest that the chip crisis will persist for 12–24 months, until new global capacity and process nodes ramp meaningfully keeping demand constrained through 2026, with meaningful relief only around 2027–2028.

The memory market is dominated by three players, and they have prioritized HBM over legacy DRAM owing to high demand and high margin from large data centers & AI Players. This shift from DRAM to HBM by the memory foundry has coincided with a replacement cycle for traditional data centers and PCs, and stronger smartphone demand that uses DRAM.

Navigating Current Crisis

"DRAM fabs require three to five year lead times. If AI demand stays elevated, over‑investing, tightness could easily extend toward the decade's end. Demand is structurally higher—each AI GPU stack can use up to a terabyte of high‑bandwidth memory, and players like Nvidia now buy memory at the scale of top smartphone OEMs," explained Sujay Shetty, MD, ESDM and Semiconductor, PwC India.

But this demand is amplified by bullwhip dynamics: hyperscalers and governments are stockpiling, PC OEMs are panic‑buying on spot markets, and capacity is being diverted from commodity DRAM to HBM, worsening perceived scarcity. Budget devices (phones <INR20,000; laptops <INR50,000) are under maximum pressure, while datacenter projects are revising capex upwards due to sharply higher memory line‑items.

"Indian EMS players may see lower impact as the focus is more on assembly and the sourcing decisions are made by OEMs who are passing on the price down to consumers. Indian EMS players will not face an immediate crisis as their BoMs are mostly managed by the OEM/brands that they assemble in India. These OEMs have long-term contracts with their suppliers, and these contracts will ensure the supply to Indian EMS players and manufacturers," Shetty added, explaining how Indian players can navigate the crisis.

However, if the supply crunch worsens, in that case there will be a global impact on the production of smartphones, IT Hardware, etc. - especially in the entry level segments. Most affected sectors are: budget consumer electronics, and mid‑range PCs and phones.

The India memory chip market is valued at $3,830 million in 2024, driven by expansion in smartphone manufacturing, increasing data centre deployments, and growth in automotive electronics demand. Major hubs such as Bengaluru, Hyderabad, and Pune dominate owing to their established semiconductor design centres, R&D clusters, and growing foundry and OSAT investments, while Gujarat and Assam emerge strong due to new wafer fabrication and assembly units backed by government's Semicon India Programme, according to a report by Nexdigm Market Research.

Sharing insights into self sufficiency of memory chips, Shetty explained, "Achieving self sufficiency in memory chips is a five-ten-plus years journey for India. ISM needs to attract advanced memory foundry with strong technology partnership with Indian players. This will give India memory manufacturing capacity, however the complexity of the memory chip will keep dependency on the global supply chain."