Archive · 10 Sep 2026
How a 1989 Fire Derailed India’s Early Chip Dream
India wanted to make computer chips at home instead of depending on other countries.
The government created a special company called Semiconductor Complex Limited to do this.
Leaders debated whether the factory should be built in Madras or Mohali.
Political pressure led to Mohali being chosen.
The factory opened in 1983 and made increasingly advanced chips.
On 7 February 1989, a huge fire destroyed most of the important production areas.
Some people suspected an electrical short circuit, while others wondered whether the fire was deliberate.
Rebuilding took about eight years, and the technology changed quickly during that time.
India later focused more on software, while other countries built stronger chip industries.
India approved Semiconductor Complex Limited in 1976 to build domestic chipmaking and research capabilities.
Despite technical arguments favoring Madras, political pressure from Zail Singh helped locate the facility in Mohali, Punjab.
With technology from American Microsystems, the Mohali complex began production in 1983 and advanced from five-micron to 1.2-micron chips.
A major fire on 7 February 1989 destroyed much of the manufacturing and research facility; its cause was never publicly settled.
Reconstruction took years, and India’s lack of capital, policy certainty and an industrial ecosystem allowed other semiconductor producers to pull ahead.
- Who
- The Indian government, Semiconductor Complex Limited, Indira Gandhi, Zail Singh, engineers and foreign technology partners.
- What
- India’s early attempt to build a state-backed semiconductor industry was disrupted by a major fire at its Mohali facility.
- When
- SCL was approved in 1976, began production in 1983, and suffered the fire on 7 February 1989; rebuilt production resumed in 1998.
- Where
- The facility was located in Mohali, Punjab, after Madras was rejected as the proposed site.
- Why
- India sought technological self-reliance and strategic control over semiconductor production, but the project later lost momentum because of the fire, reconstruction delays, limited capital, policy uncertainty and foreign technology restrictions.
Critics and Skeptics
Supporters and Defenders
Choosing Mohali over Madras
Critics and Skeptics
Technical assessments reportedly favored Madras because of its surrounding talent and research ecosystem, and critics argued that political pressure overrode those considerations.
Supporters and Defenders
Zail Singh and Parkash Singh Badal argued that locating a major high-technology facility in Punjab could attract more technology companies and spread industrial development.
What caused the fire?
Critics and Skeptics
Some strategic-community figures, including Jairam Ramesh as later reported, believed deliberate arson or sabotage could not be completely ruled out, especially amid Punjab’s militancy.
Supporters and Defenders
Ashok Parthasarathi later suggested that an electrical short circuit in the mezzanine floor may have started the fire; the government inquiry did not publicly settle the cause.
Why India fell behind
Critics and Skeptics
Critics cited weak policy frameworks, bureaucratic delays, insufficient capital and dependence on foreign technology as reasons India lost momentum.
Supporters and Defenders
Industry advisers said India’s later semiconductor strategy should not simply copy Taiwan, arguing that current policies such as ISM 1.0 and ISM 2.0 should reflect India’s own capabilities and constraints.
- Project approved
- The Cabinet approved creation of Semiconductor Complex Limited in 1976.
- Original cost estimate
- The project was initially estimated at Rs 16 crore, later revised to Rs 55 crore in 1980.
- Technology partner
- American Microsystems, Inc. signed a technology-licensing agreement with SCL in 1980.
- Initial production
- SCL’s first microchip was a five-micron CMOS telephone-dialling chip.
- Fire date and time
- The fire began at approximately 11:40 p.m. on 7 February 1989.
- Fire damage
- The Tribune reported damage estimated at Rs 75 crore; the device-manufacturing and R&D areas were extensively damaged.
- Reconstruction
- The rebuilt VLSI facility was inaugurated on 17 December 1997, and commercial production began in 1998.