Highlights

• Tata Electronics is building a US$11 billion semiconductor fabrication plant in Gujarat.
• The project aims to begin trial production by mid-2027.
• The project's success depends more on equipment and supply chain complexity than rare earth element availability.
• India's semiconductor ambitions are strategically linked to securing critical materials supply chains.
• There are potential dependencies on Chinese mineral resources.

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Tata Electronics (opens in a new tab) is building India’s first pure-play semiconductor fabrication plant in Dholera, Gujarat (opens in a new tab), with its technology partner PSMC (opens in a new tab) of Taiwan. Announced under India’s Semiconductor Mission in 2024, the US$11 billion project aims to begin trial wafer production by mid-2027. Construction is moving fast, with hiring across Japan, Korea, and Taiwan, and early vendor partnerships locked in. Analysts, including Gartner, confirm the project is real and progressing, though likely to hit full capacity closer to 2030.

Where the Story Gets Cloudy

The Mint article (opens in a new tab) suggests a “rare earths crisis” could derail the fab’s rollout. This phrasing demands scrutiny. While rare earth elements (REEs) like cerium and yttrium are indeed used in polishing wafers and certain deposition processes, the backbone of a fab is 99% pure silicon plus gases, chemicals, and extreme-precision equipment. The executives cited vaguely point to “considerable use of rare earths” in chipmaking, but semiconductor supply chains depend far more heavily on critical materials like hafnium, molybdenum, and cobalt—all important, but not all technically rare earths.

Hype, Hooks, and Hazards

By branding the challenge as a “rare earths crisis,” the piece risks overplaying China’s dominance in REEs while underplaying other major critical choke points: lithography machinery, ultra-pure chemicals, and stable power. This bias frames Tata’s delays as a story of geopolitical metals scarcity rather than the broader, messier reality of building fabs in a nascent ecosystem. Investors should note: while China’s grip on heavy rare earths is absolute, there’s little direct evidence it will determine whether Tata hits 2027 or 2030.

Why It Matters for Rare Earth Supply Chains

That said, the narrative has teeth. Even if REEs are not the single linchpin, India’s dependence on Chinese-controlled mineral inputs—whether REEs, hafnium, or gallium—exposes the fragility of its semiconductor ambitions. The Indian government’s ₹1,500-crore “critical minerals mission” approved this month is a direct response to such risks. For investors, the signal is clear: semiconductor self-reliance is not just about fabs, but about securing upstream critical materials supply chains, where China remains the gatekeeper.

Bottom Line

Tata’s chip fab is more likely to stumble on equipment delays and supply-chain complexity than on rare earth shortages alone. Still, framing the issue through the REE lens highlights a strategic truth: without parallel investment in minerals, India’s semiconductor dreams remain tethered to Beijing’s mineral policy.

Citation: Shouvik Das, Mint, “Tata aims to roll out India-made chips by mid-2027, but rare-earths crisis could derail plan (opens in a new tab),” September 11, 2025.

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