Archive · 16 Nov 2025
India's IT Sector Boosts Chip Design and AI Engineering Capabilities
Imagine computers and phones needing tiny special parts called semiconductors, like the brains of the devices.
Because everyone wants more advanced gadgets, companies that make these parts are really busy.
Now, IT companies in India are getting better at helping design these tiny parts and using smart computer programs (AI) to make the factories that build them work even smarter.
This isn't going to be as big as helping everyone use the internet (cloud) or general AI tools, but it's a special and growing area where they can use their smart engineers.
They are focusing on the design and software parts, not the huge factories themselves, helping global companies and also building up India's own ability to make these important parts.
AI helps make sure these parts are made correctly and efficiently, and digital twins can help train workers and monitor factories remotely.
While not as massive as cloud services, this specialized area is expected to grow significantly.
India's IT services leaders are enhancing their semiconductor design and AI-driven engineering capabilities.
This specialized segment is expected to deliver double-digit growth within the ER&D portfolio of companies like UST.
Global chip shortages and increased demand for electronics present a strategic opportunity for semiconductor services.
IT firms are focusing on specialized areas like chip design, verification, and software, rather than capital-intensive manufacturing.
AI and digital twins are being utilized to improve efficiency, yield, and monitoring in semiconductor fabs and packaging facilities.
- Who
- India's IT services leaders (e.g., UST), global chipmakers, analysts (Forrester), IISc's FSID CORE Labs
- What
- Expanding semiconductor design and AI-driven engineering capabilities to tap into a niche growth area.
- When
- Present and projected over the next 3-5 years.
- Where
- India
- Why
- Global chip shortages, increased demand for advanced electronics, India's semiconductor mission, and the strategic opportunity to focus on high-value design and software aspects of chip development.
Analyst View
Industry & Expert Outlook
Scale of Growth
Analyst View
While a specialized niche, the segment is steadily expanding and poised for much larger growth, remaining a specialized play rather than a mainstream focus.
Industry & Expert Outlook
This segment is projected to deliver double-digit growth within ER&D portfolios and is set to become a much larger market with growth already well underway.
Revenue Potential
Analyst View
Revenue potential will be modest compared to cloud or AI, likely in the low single-digit percentage of overall IT services revenue over the next 3-5 years, translating to hundreds of millions rather than billions for large players.
Industry & Expert Outlook
The segment is projected to deliver double-digit growth within ER&D portfolios over the next five years. Companies are building end-to-end capabilities including OSAT partnerships.
Core Focus
Analyst View
IT firms can carve out a niche in design, verification, and software-driven aspects, leveraging engineering talent, but core manufacturing and fabrication remain capital-intensive and dominated by global giants.
Industry & Expert Outlook
Companies are focusing on advanced tool development, moving beyond purely service-oriented work, and building end-to-end capabilities including pre-silicon design, post-silicon validation, and manufacturing process support through OSAT partnerships.
- Date Published
- November 16, 2025
- Key Growth Areas
- Semiconductor Design, AI-Driven Engineering, Verification, Embedded Systems, OSAT (Outsourced Semiconductor Assembly and Test)
- Supporting Initiatives
- India's Semiconductor Mission, PLI/DLI schemes
- Key Company Mentioned
- UST
- UST Joint Venture Partner
- Kaynes Semicon
- JV Location
- Gujarat
- UST Team Size (Semiconductors)
- 10,000 members
- UST Semiconductor Expertise
- R&D, Hardware, Software, ATE, pre-silicon design, post-silicon validation, EDA automation