Tata Electronics' plan to roll out its first semiconductor chip from its Dholera, Gujarat plant by mid-2027 may face delays if India fails to secure sufficient supplies of rare earth and critical elements, according to Mint, citing unnamed sources.
According to the report, Tata expects the cleanroom to be ready by early 2027, when equipment installation and trial production will begin. However, sources noted that while most initial vendors have been finalized in line with partner Powerchip Semiconductor Manufacturing Company's (PSMC) recommendations, disruptions in securing rare earths could hinder production.
Semiconductor fabrication requires high-purity silicon as well as critical inputs such as hafnium and molybdenum. Rare earth elements are also used in wafer polishing, etching, and specialized equipment. The second executive warned that prolonged supply chain disruptions linked to Chinese restrictions could impact Tata's wafer production timeline.
The rare earth shortage has already affected other industries in India. Maruti Suzuki cut production of its electric e-Vitara SUV from 26,500 units to 8,200 units between April and September 2025, citing limited access to rare earth magnets. Bajaj Auto also flagged potential disruption to electric scooter production. The Electronics Industries Association of India has reported that over 21,000 jobs in the audio electronics sector are at risk, as manufacturers turn to importing finished goods due to the supply crunch.
To address the crisis, the Indian government approved an INR15 billion (approx. US$170 million) critical minerals mission earlier this month, aimed at establishing a domestic supply chain. Other measures include fiscal incentives for local rare earth magnet production, exploring supply agreements with Myanmar's Kachin Independence Army, according to Reuters, and accelerating the development of magnet-free EV motors. Diplomatic engagement with China is also ongoing to stabilize supply routes.
Article edited by Jack Wu
