On September 27, India’s Prime Minister Narendra Modi met the Tata Sons and Taiwan-based Powerchip Semiconductor Manufacturing Corporation (PSMC) management workforce to debate the prospects of semiconductor manufacturing tasks in India. A couple of days earlier than that, throughout his go to to the US, Modi urged top tech companies in the U.S. to discover India as a vacation spot for manufacturing and innovation. Throughout Modi’s go to, India and the US additionally reached an agreement to work collectively on establishing a semiconductor fabrication plant in India.
Earlier in August, in his Independence Day speech, Modi referred to as for India to develop into a global leader in semiconductor manufacturing. On the Semicon India 2024 summit, Modi reiterated India’s aspirations to develop into a semiconductor hub. Clearly, India is making systematic efforts to ascertain itself as a frontrunner within the semiconductor sector.
The favorable geoeconomic atmosphere marked by de-risking because of China-U.S. commerce tensions and sturdy home demand for digital merchandise presents India with a wonderful alternative to cooperate with overseas companions to develop into a key node within the international semiconductor provide chain.
Modi’s go to to Singapore from September 4 to five turns into important on this context. His first journey to the Southeast Asian area in his third time period, which additionally included a cease in Brunei, introduced substantive good points. The go to noticed the elevation of the India-Singapore relationship to a complete strategic partnership, together with the signing of 4 agreements in semiconductors, digital applied sciences, well being cooperation, and talent improvement. The spotlight of the go to was a Memorandum of Understanding (MoU) between the 2 sides within the semiconductor sector, which goals to bolster cooperation between India and Singapore. It might assist strengthen India’s burgeoning semiconductor trade by facilitating the entry of Singaporean semiconductor firms and associated provide chains in India.
Regardless of being a small city-state, Singapore is among the main gamers within the international semiconductor trade. Based on the Singapore authorities, the semiconductor industry contributes round 7-8 p.c to the nation’s GDP. Singapore’s semiconductor trade accounts for 11 p.c of the worldwide semiconductor market, 5 p.c of worldwide wafer fabrication capability, and 20 p.c of worldwide semiconductor tools manufacturing.
Furthermore, Singapore’s well-established semiconductor ecosystem consists of a number of renowned firms – 9 of the world’s prime 15 semiconductor firms function in Singapore – and as per the Singaporean authorities, these firms are eager to take part within the progress of India’s semiconductor trade.
The Singapore authorities’s business-friendly insurance policies facilitate investments within the semiconductor trade, leading to a thriving job market within the manufacturing sector in an in any other case service-dependent financial system. Due to this fact, amid the China-U.S. competitors, Singapore has been perceived as a secure wager for de-risking and bettering provide chain resilience.
Nevertheless, the rising price of manufacturing is forcing semiconductor firms to maneuver up within the worth chain and diversify labor-intensive operations out of Singapore. As an example, the UTAC Group, a semiconductor take a look at and assembly services provider, has moved its handbook and technologically dated operations from Singapore to Thailand. Notably, semiconductor firms in Singapore face extreme land and labor limitations, and their growth in India – with ample land and expert labor – can ameliorate this downside.
India’s newest try to develop into a key node within the semiconductor manufacturing ecosystem started within the post-pandemic interval. Provide chain disruptions because of the COVID-19 pandemic and China-U.S. commerce tensions turned the Indian authorities’s consideration again to creating a semiconductor manufacturing ecosystem within the nation after a number of failed makes an attempt up to now. What was completely different on this try was that it geared toward concurrently constructing all of the important levels of the semiconductor provide chain. The Indian authorities outlined this in December 2021, when it laid down a $10 billion comprehensive program – comprising 4 schemes masking completely different levels of the semiconductor provide chain – to develop the semiconductor manufacturing ecosystem in India.
This system intends to lure overseas firms by offering capital subsidies (from each central and provincial governments) to invest in India’s semiconductor manufacturing trade. The provincial governments have additionally positively obtained this program. The Maharashtra state government authorized a $10 billion semiconductor fabrication unit by the Adani Group and an Israeli agency, Tower Semiconductor. A number of foreign companies (Micron, PSMC, Kaynes, and so forth.) have invested in numerous levels of the semiconductor provide chain, both alone or as a three way partnership with an Indian agency.
Moreover, the federal government additionally established an independent division generally known as India Semiconductor Mission (ISM) to bolster India’s semiconductor ecosystem. In March 2024, Modi claimed that ISM is poised to see big progress within the subsequent 5 years.
In March 2024, the federal government made some revisions to the unique program for the semiconductor trade. The modified program aims to offer a 50 p.c subsidy for all node sizes, in comparison with a 50 p.c subsidy for modern nodes (28 nm or decrease) and 30-40 p.c for trailing-edge nodes (above 28 nm as much as 65 nm) within the authentic program. Additional, the modification paves the way in which for upfront capital disbursal – earlier than manufacturing begins – in comparison with capital disbursal solely as soon as the manufacturing begins. By these modifications, the Indian authorities has acknowledged that it needs to start out its semiconductor journey from the decrease finish (trailing-edge nodes) and climb up (modern nodes), reflecting the federal government’s seriousness in attracting overseas investments.
India can be partnering with different main semiconductor powers to develop the trade at house by attracting overseas investments. In March 2023, India signed an MoU with the US on establishing a semiconductor provide chain. Comparable agreements have been signed with the European Union and Japan.
India’s journey to develop into a semiconductor hub will possible face stern manpower challenges, amongst others. A latest report asserted that India is predicted to face a scarcity of 250,000-300,000 professionals throughout the various verticals of the semiconductor trade by 2027. The India Electronics and Semiconductor Affiliation (IESA) plans to ship a few of its workforce to Singapore for semiconductor coaching. Nevertheless, the power of the federal government to equip overseas industries with a talented workforce in giant numbers stays to be seen.
The MoUs with Singapore, Taiwan, and the U.S. can enable India to leverage investments that it has made within the semiconductor trade together with robust home demand for digital and electrical merchandise. The federal government’s capability to create a business-friendly atmosphere for semiconductor firms will decide the tempo of India’s journey to develop into a worldwide chief in semiconductor manufacturing.
