Chipset shortage and the Indian Drone Ecosystem
- Manasa Kavya
- May 23
- 3 min read
Overview
Semiconductors and the chipsets built from them play a vital role in nearly all modern gadgets, from smartphones to satellites and everything in between. The evolution of chipsets has been one of the key drivers behind the miniaturization, energy efficiency and real-time processing capabilities of today’s devices, making them faster, smarter and more compact.
In drones, whether a simple Remote Control (RC) plane built by an enthusiast or a military-grade Unmanned Aerial Vehicle (UAV) deployed by the armed forces, chipsets form the core of critical components. Flight controllers, receivers, cameras, motor controllers, smart batteries and other subsystems rely on chipsets for decision-making and functionality.
Supply chain
A closer look at the semiconductor supply chain reveals two primary sectors: one focused on design, and the other, foundries, dedicated solely to manufacturing. These foundries, predominantly concentrated in Asia, process designs into physical chips based on incoming orders.
The foundry sector suffered significantly during the COVID-19 pandemic. Already vulnerable due to natural disasters, geopolitical tensions and unpredictable demand shifts, it collapsed under pressure, triggering a global chipset shortage. This crisis disrupted industries across the world, including electronics, drones, electric vehicles and entertainment. No one was spared.
Transforming base materials like silicon, gallium and germanium into functional chips is a time-intensive process, taking approximately three months. This lengthy production cycle meant that even once the shortage was identified, it couldn’t be quickly resolved. It took nearly three years for foundries to ramp up production and for the market to stabilize supply and demand.
However, the situation worsened in July 2023 when China’s Ministry of Commerce announced export controls on gallium and germanium-related items. According to the Financial Times, the prices of these materials nearly doubled. China, which produces 98% of the world’s gallium and 54% of its germanium, drastically cut exports, heightening global concerns.
Impact on Indian drone market
India’s drone industry was deeply impacted during this time. Whether a commercial drone manufacturer or a hobbyist, obtaining even a basic flight controller became a daunting task. Online stores flooded with backorders and physical retailers had no clear timeline for restocking. Enthusiasts and manufacturers had to adapt quickly, planning purchases well in advance, sourcing used components and experimenting with open-source firmware. The community came together in creative ways: redesigning parts to fit available resources, launching repair & refurbishment initiatives and actively sharing knowledge. Relationships and collaborations became more critical than ever.
This adversity sparked a significant transformation within India’s drone ecosystem. A growing number of stakeholders began focusing on in-house development of components, semiconductors, chipsets and open-source software. In response, the government launched initiatives such as the India Semiconductor Mission (ISM) and the Semicon India Programme to boost domestic chipset production. The Design Linked Incentive (DLI) scheme aimed to foster the development of indigenous Intellectual Property (IP).
Several key players established fabrication units for wafer production, set up R&D facilities, adopted the Outsourced Semiconductor Assembly and Test (OSAT) model and created cleanroom infrastructure for Assembly, Testing, Marking and Packing (ATMP) operations. Collaborations with established firms facilitated design and IP integration. Distributors stepped in with technical expertise, logistics and supply chain solutions, enabling Indian manufacturers to meet growing demand. Other distributors helped expand the local component market. Moreover, many startups pivoted towards the semiconductor space.
Way ahead
For Indian drone manufacturers, the lack of a reliable supply chain has long been a bottleneck. Strengthening the chipset sector is key to overcoming this challenge.
India must now aim to reach the standards set by the Taiwan Semiconductor Manufacturing Company (TSMC), a global leader with a robust supply chain and a well-established ecosystem. While India has a strong talent pool for chip design, manufacturing presents an entirely different set of challenges. It demands large-scale, sustained investment, highly skilled labor, uninterrupted power and water supply, advanced water purification systems, global supply chain integration and technology transfers.
Additionally, the growth of ancillary industries like specialty chemicals, silicon wafers, photomasks and more, is essential to support the ecosystem and maintain a short, local supply chain. For this vision to materialize, the Central and State Governments, industries and startups must collaborate as a unified force.
The time is ripe for India to build a self-reliant semiconductor ecosystem, one that supports not just the drone industry but the broader ambitions of the Make in India movement.
Meet Manasa Kavya, an aeronautical engineer with a knack for designing drones and making complex tech easy to understand. With over four years in UAV design and development, she’s worked on everything from multirotors to fixed-wing drones for real-world missions.
Whether it's building a drone or breaking down how it works, Manasa brings hands-on experience and clear insight.
Outside her profession, she’s passionate about making STEM fun and approachable. Her articles aim to do just that—mixing deep know-how with a simple, engaging style—exploring ideas, telling stories and making technical concepts more accessible and human.
