As India pours billions into chip fabs and packaging plants, a veteran materials supplier warns that silicon alone won’t build a globally competitive semiconductor industry — precious metals and the ecosystem behind them will.
India’s semiconductor ambitions have a very public face: fabs, OSAT (outsourced semiconductor assembly and test) plants, and chip-design centers backed by government incentives and marquee industry announcements. What gets far less attention is the layer of the supply chain working quietly beneath all of it — the advanced materials that make a chip actually function, survive, and perform.
Few companies understand that layer better than TANAKA Precious Metal Technologies, a Japanese materials specialist that has been supplying the semiconductor industry since the earliest days of chip packaging.
In a conversation with Express Computer, Yasutaka Ihara, Director and Corporate Officer at TANAKA, laid out a case that India’s policymakers and industry leaders may want to study closely: manufacturing capacity is necessary, but it isn’t sufficient. Long-term competitiveness will be decided by how well the country builds out the materials, process engineering, and supplier ecosystem around that capacity.
From bonding wire to the backbone of AI hardware
TANAKA’s own history is a useful lens on how central materials have become to semiconductor progress. The company’s role began with gold bonding wire in the 1960s, when the industry’s biggest challenge was simply achieving stable, reliable electrical connections. Precious metals — silver, gold, platinum, palladium, iridium, rhodium, ruthenium, and osmium — earned their place in chip manufacturing because of a rare combination of conductivity, corrosion resistance, chemical stability, and workability.
That role has expanded dramatically since. Ihara noted that as AI, high-performance computing, electric vehicles, and digital infrastructure push semiconductor devices to become more powerful and complex, materials now touch nearly every stage of production: front-end manufacturing, advanced packaging, and testing. TANAKA has grown alongside that shift, and Ihara pointed to an equally important, less visible discipline — refining and recycling — as central to the company’s mission, since precious metals are “valuable and finite resources.”
The opportunity — and the trap — in advanced packaging
India’s semiconductor strategy has leaned heavily on attracting fabs and OSAT investment, and Ihara sees real logic in that approach given the country’s manufacturing base, engineering talent, and the global push to diversify chip supply chains away from concentrated hubs. Advanced packaging, in particular, stands out as a growth opportunity: as chip performance increasingly depends on how devices are packaged rather than purely on transistor scaling, packaging has become what Ihara called a “key enabler of device performance, power efficiency, and reliability.”
But he was direct about the risk of stopping there. Building packaging and assembly capacity, he argued, is “only one part” of developing a truly competitive semiconductor industry — advanced materials, process engineering, supplier networks, and cross-industry collaboration need to mature in parallel, or India risks getting stuck in lower-value manufacturing rungs even as its factory footprint grows.
Materials as the missing pillar of India’s chip policy
This is the crux of Ihara’s argument for India: chip design, fabs, and OSATs have dominated the policy conversation, but advanced materials deserve equal billing because they directly determine manufacturing stability, yield, and long-term reliability — the metrics that ultimately decide whether a semiconductor hub is trusted with high-value work.
His recommendation for India is sequenced rather than all-at-once. The near-term priority, he suggested, is to build a solid manufacturing base using materials, equipment, and production techniques that are already proven globally, which accelerates output while the ecosystem matures. But as the industry grows, that alone won’t be enough — improving yields and developing next-generation processes will require a much deeper understanding of materials, which in turn depends on tighter collaboration between chipmakers, materials suppliers, equipment vendors, and research institutions. Ihara pointed out that today’s mature semiconductor economies didn’t get there through manufacturing scale alone; they built that collaborative ecosystem over decades.
Engineering for AI’s harder problems: heat, density, reliability
AI and HPC workloads aren’t just increasing chip demand — they’re changing what materials are expected to do. As devices become smaller, more densely integrated, and more power-hungry, thermal management and long-term reliability have become as critical as raw electrical performance.
Ihara described how precious-metal technologies have had to evolve in response, moving beyond simple conductivity to deliver a balance of electrical and thermal performance, corrosion resistance, mechanical durability, and manufacturing consistency — down to controlling material purity and microstructure with a precision where even minor variations can affect device reliability. Increasingly, he said, materials development is being integrated directly into process development, with chipmakers, equipment companies, and materials suppliers co-optimizing rather than working in sequence.
AI’s ripple effects reach further than logic chips
Asked what early signals TANAKA is seeing from inside the supply chain, Ihara offered a broader picture of how AI is reshaping materials demand — one that extends well past logic and memory. He pointed to rising demand for high-purity sputtering targets used in next-generation hard disk drives, which remain essential to large-scale AI data storage, as an example of AI’s reach into adjacent hardware categories.
At the same time, he described a shift in philosophy across the industry: rather than simply consuming more precious metal to hit performance targets, manufacturers are focused on extracting more performance from less material — a trend he expects to keep driving innovation in materials engineering, manufacturing processes, and device design, alongside a growing emphasis on circularity and resource efficiency as global production scales up.
Why supply-chain regionalization makes recycling strategic
As chip supply chains regionalize, securing consistent access to gold, platinum, palladium, and rhodium has become, in Ihara’s words, “a strategic priority” — not just a question of availability, but of quality, traceability, and responsible sourcing. He pointed to the electronics industry’s long-established circular ecosystem for precious metals as a model: because these elements are valuable and finite, the industry has built systems to keep them in circulation without compromising the purity semiconductor manufacturing demands.
For India, that’s a pointed lesson. A resilient materials strategy isn’t only about securing new supply — it’s about building the refining and recycling infrastructure that lets a country make the most of what it already has.
AI as the demand multiplier across every other bet
India is simultaneously chasing growth in AI, electric vehicles, telecom, and electronics manufacturing, and Ihara was asked which would matter most for materials demand. His answer reframed the question: AI isn’t a competing vertical alongside EVs and telecom — it’s the enabling layer accelerating all of them at once, from data centers and cloud computing to autonomous mobility and consumer electronics.
That, he argued, is precisely why AI will be the strongest long-term driver of demand for advanced semiconductor materials. Meeting AI-scale compute needs requires more powerful processors, advanced memory, and increasingly sophisticated packaging — each of which raises the bar on material purity, thermal management, reliability, and manufacturing precision.
Six years in, TANAKA sees India’s story shifting from promise to execution. TANAKA established its India operations in 2019, betting early on semiconductors, hydrogen energy, and advanced manufacturing. Looking back, Ihara pointed to one shift as most significant: India has moved from talking about future potential to actively building the capabilities that potential requires, with rising activity across semiconductor manufacturing, electronics production, advanced manufacturing, and clean energy.
Progress, in his view, is no longer just about capacity. It’s increasingly about the surrounding ecosystem — engineering talent, materials technologies, equipment, supplier networks, and industry collaboration — maturing in step with manufacturing investment.
The 2030 benchmark
Asked what success looks like by 2030, Ihara set a bar that goes beyond factory output: India meeting a growing share of its own semiconductor demand domestically, while deepening collaboration with global technology companies and becoming an increasingly important link in the global supply chain. Getting there, he said, depends on the same formula he returned to throughout the conversation — advanced materials, manufacturing technology, engineering expertise, supplier networks, and ecosystem-wide collaboration developing together, not in isolation.
TANAKA, he said, sees its role as a long-term technology partner in that journey rather than a transactional vendor, and framed the company’s growth as tied to India’s own: “if India succeeds in building a resilient and globally competitive semiconductor ecosystem, it will create opportunities for the entire industry.”