India and US Align on Critical Minerals for Chip Supply Chain

India and US Secure Semiconductor Critical Mineral Supply Chains

India and the United States have taken significant coordinated steps to align their critical mineral supply chain strategies with direct implications for semiconductor manufacturing, formalised through India's entry into the Pax Silica coalition at the India AI Impact Summit in New Delhi in February 2026. The bilateral dimension of this alignment involves agreements to develop India's mineral extraction and processing capabilities for minerals essential to semiconductor manufacturing, while the multilateral Pax Silica framework provides a twelve-country structure for coordinating supply chain resilience across critical mineral, semiconductor and AI infrastructure supply chains.

India's Critical Mineral Endowment

India holds substantial reserves of several minerals critical to semiconductor and advanced electronics manufacturing, including thorium, which is relevant to certain ceramic and specialty substrate applications, rare earth elements including lanthanides used in magnet materials for motors and in phosphors for display and LED applications, and specialty industrial minerals used as abrasives and chemicals in wafer polishing, chemical mechanical planarization, and etch processes. India also holds significant bauxite reserves, a source of aluminium oxide materials used in semiconductor packaging substrates and as a base for certain ceramic chip carriers.

China's Dominance and the Supply Chain Risk

China processes approximately 70 percent of the world's critical minerals and controls over 90 percent of production for certain key materials used in advanced electronics and semiconductor manufacturing, including rare earth permanent magnets, gallium, germanium, and indium. China's repeated use of export controls on these materials as geopolitical leverage has elevated supply chain risk assessments for semiconductor manufacturers and governments dependent on Chinese mineral processing, providing the strategic rationale for the Pax Silica coalition's mineral security agenda.

The Pax Silica Fund for Minerals

The Pax Silica Fund, with a planned allocation of US$250 million, earmarks a significant portion for critical mineral extraction and processing infrastructure in member countries. For India, potential fund applications include investment in rare earth processing facilities, specialty chemical production plants supplying semiconductor fabs and packaging units, and technical assistance for developing mineral deposits that have previously lacked the infrastructure investment to be commercially viable. The fund's focus on both extraction and processing acknowledges that raw mineral reserves are less strategically valuable than the processing capacity that converts them into materials usable by semiconductor manufacturers.

India as a Mineral Processing Hub

One long-term vision embedded in the India-US critical minerals cooperation is positioning India as a processing hub for minerals sourced from South Asian, African and Indian Ocean region suppliers, providing an alternative to Chinese processing for coalition members. India's established chemical processing industry, port infrastructure on both coasts, and growing semiconductor demand provide a plausible commercial basis for mineral processing investment at scale.

Supply Chain Implications for India's Semiconductor Plants

For India's operational and under-construction semiconductor plants, the critical mineral cooperation has near-term practical implications: access to Pax Silica coordinated specialty chemical and material supply chains could reduce the cost and supply risk of process inputs for Micron's ATMP facility, CG Semi's OSAT plant and the planned Tata Dholera fab, while building India's long-term position as a country with indigenous upstream supply chain support for its semiconductor manufacturing ambitions.