India-US chip partnership could boost global chip supply chain

India is emerging as a competitive alternative to China in the semiconductor sector. chip war between America and China.

India and the US signed a memorandum of understanding last week on establishing a semiconductor supply chain. Experts see it as an opportunity for both countries to reduce their global dependence on China.

“The MoU seeks to establish cooperation mechanisms, taking into account the resilience and diversification of the semiconductor supply chain. US Chips and Science Law Charlie Dye, vice president and director of research at research firm Forrester, said:

ISM is a government initiative aimed at promoting the growth and development of the Indian semiconductor industry and driving India’s strategy for developing the semiconductor and display manufacturing ecosystem.

India aims to become major player in semiconductors

Although India does not have a homegrown semiconductor manufacturing company, it is working hard to attract global chip makers to set up facilities in the country. In December 2021, India approved her $10 billion incentive plan to attract investment in semiconductor and display manufacturing, aiming to become a major player in the global semiconductor supply chain.

The semiconductor industry relies on a complex global supply chain of raw materials such as silicon wafers, chemicals and gases. Disruptions in material supplies due to the pandemic and geopolitical tensions have led to shortages of semiconductors, affecting products ranging from servers and his PCs to automobile manufacturing.

The pandemic has caused companies in various regions to consider how to deal with supply chain disruptions. This is largely the result of over-reliance on some countries for chips.

Taiwan, South Korea, Japan, the United States, and China are currently the major players in chip manufacturing.

with the United States more and more worried The US administration of Joe Biden has imposed drastic restrictions on exports of chip technology to China over China’s growing geopolitical power, which depends in part on its manufacturing capacity.

All of this could make India a potential sweet spot for chip technology development and an important link to the global semiconductor supply chain.

Gauraf Gupta, an analyst at research firm Gartner, said the latest US-India partnership shows that the US sees India as a future partner in building resilient supply chains.

However, considering the “whole semiconductor space, including raw silicon wafers,” chip design; wafer fabrication; assembly, including testing and packaging; raw materials, including chemicals and EDA. [electronic design automation] The only area where India has a decent presence today is in chip design or where it is considered part of the fabless ecosystem,” said Gupta.

India understands the need to remain competitive in an area as important as semiconductors and is working with other countries to build resilient supply chains.

September 2021India, the United States, Japan, and Australia have joined forces to secure supply chains for semiconductors and 5G telecoms technology, seeking to stem China’s growing influence.

“If successful, India has the potential to become part of the global semiconductor supply chain, especially in manufacturing, where China, Taiwan, South Korea and Japan account for around 75% of the share. The goal is to ensure a balanced regional distribution of chip manufacturing shares for the future, so that we can better respond to logistical and geopolitical crises such as those that occurred during the pandemic,” said Gupta. increase.

According to Gupta, India’s most important task now is to demonstrate its first commercial fab.

Just this week, India’s IT Minister Ashwini Vaishnav said the country was ready to unveil its first semiconductor manufacturing facility, picking up proposals from one of three international bidders. IGSS Ventures.

If one of the proposals goes ahead quickly, it could take three to four years before manufactured wafers are shipped to customers, Gupta said. For outsourced semiconductor assembly and test (OSAT), the timeline could be from two and a half years to three years, he said.

“At the moment, we are not going to focus specifically on when India will become a viable alternative to the established countries. There are government plans, proposals, interests and agreements, but what really matters is how and when the project is actually implemented,” Gupta said.

India could become a major chipmaker in 3-4 years

However, some experts believe India could become a manufacturing nation within three to four years, given its resourcefulness and focus on skill development.

“With a very advanced and robust chemical industry, India has a very large chip design capability. [national education policy]New Syllabus Design by AICTE [All India Council for Technical Education] Recently, there has been a major policy push for hardware, including PLI. [product-linked incentive] and DLI [design-linked incentives] According to government plans, India should become a semiconductor manufacturing nation in three to four years. ”

As both India and the United States focus on building resilient domestic semiconductor supply chains, the MoUs of India and the United States will resolve regulatory barriers to business and talent mobility in the two countries and facilitate a diversified semiconductor supply chain. It helps promote the long-term strategic development of the ecosystem. Forrester’s Dai said:

The MoU is not only expected to lead to greater cooperation in technology development between the United States and India, but also has the potential to encourage companies to invest in the semiconductor sector, said IDC Taiwan’s Asia/Pacific Semiconductor Research. said Helen Chiang, Director and General Manager. “This cooperation also shows that the United States wants to form more partnerships with supply chains outside of China in order to build a US-led semiconductor ecosystem. It is the seventh-largest country in the world.A deeper relationship with the United States would be a potential concern for China in the long run.”