2023-07-01 07:08:00
US-India Cooperation in Semiconductor Field Amidst Global Chip War
Quad: The leaders of Australia, Japan, India, and the US committed themselves to building resilient, diverse and secure supply chains of critical and emerging technologies including Semiconductors.
India-US iCET (Initiative on Critical and Emerging Technology)
It was launched by the US President and Indian Prime Minister on the sidelines of the Quad summit on May 2022.
The primary goal is to elevate and expand Indo-U.S. strategic technology partnership and defence industrial cooperation between the governments, businesses, and academic institutions of the two countries.
Resilient Semiconductor Supply Chains is one of the identified six focus areas of co-development and co-production under iCET.
Joint Task Force
A task force set up jointly by the US Semiconductor Industry Association and India Electronics Semiconductor Association together with the government’s Semiconductor Mission.
It will make a “readiness assessment” to identify “near term opportunities and facilitate long-term strategic development of complementary semiconductor ecosystems”.
The task force would also flag opportunities and challenges for India’s role in the global semiconductor value chain.
MoU on Semiconductor Supply Chain and Innovation Partnership: During the PM’s US state visit, an MoU was signed on Semiconductor Supply Chain and Innovation Partnership to promote commercial opportunities, research, talent, and skill development.
Announcement by US Companies for India’s Semiconductor Field
Micron Technology, a leading US semiconductor firm, announced a proposed investment of up to $825 million to build a facility in India, with the Indian government pitching in to take the combined investment value to $2.75 billion.
This will create up to 5,000 new direct and 15,000 indirect job opportunities in the next five years.
Lam Research announced a proposal to train 60,000 Indian engineers through its Semiverse Solution virtual fabrication platform.
Applied Materials announced a proposed investment of $400 million to establish a collaborative engineering centre in India.
India’s Chip Challenges
Similar attempts failed earlier: Three companies that applied to set up fabrication plants (Foxconn-Vedanta joint venture, Singapore’s IGSS, etc) failed to get off the ground for separate reasons.
Expensive Fab Setup: A semiconductor fabrication facility (or fab) can cost multiples of a billion dollars to set up even on a relatively small scale and lagging by a generation or two behind the latest in technology.
Resource Inefficient Sector
Chip fabs are also very thirsty units requiring millions of litres of clean water, an extremely stable power supply, a lot of land and a highly skilled workforce.
At the moment, there is no place in India that can guarantee 24×7 power or water supply.
Lack of Highly Skilled Workforce: Chip manufacturing also requires a highly skilled workforce. Industry experts have repeatedly said that chip making is “not like assembling a phone”.
Absence of “Chip Ecosystem”
The absence of a “chip ecosystem” is why, despite the political will, no big international chip makers have yet shown interest in India.
Taiwan has long been pushing India for a free trade agreement and a bilateral investment agreement to make it more attractive for TSMC, the world’s biggest chip maker, to set up base here, but Delhi has been reluctant.
Lack of Fabrication Capacities: India has a decent chip design talent but it never built-up chip fab capacity. India’s only government-owned semiconductor fabrication unit is in Mohali, Punjab.
Conclusion
India is at least two decades behind the chip curve. It could take the country 10-20 years to establish itself as a serious player in the semiconductor industry.
But for now, India has positioned itself in the global chip war, with a technology partnership that promises to take bilateral ties with the US to the next level.
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