India’s Bold Moves in Semiconductor Industry: A Strategic Partnership with the US

The semiconductor industry is at the heart of technological advancement, driving innovations across sectors like electronics, defense, and telecommunications. In recent years, India has made significant strides to build a robust semiconductor ecosystem. This effort is gaining even more momentum with new incentives aimed at foreign chipmakers and a strategic partnership with the United States.

India's Semiconductor Push

India's ambitious semiconductor journey began with the production-linked incentive (PLI) scheme introduced in December 2021, offering $10 billion in incentives to attract global manufacturers. This initiative targeted not just semiconductor fabrication units but also chip packaging, assembly, and testing facilities.

However, this was just the beginning. To stay ahead in a competitive landscape, India is now preparing an even more comprehensive incentive package, likely exceeding $10 billion, with a focus on components production—a new addition to India’s approach.

Akash Tripathi, the CEO of India Semiconductor Mission (ISM), emphasized that the objective is to lay a foundation for sustained growth over the next decade. The scope is broad, covering not only fabrication plants but also assembly, testing, and packaging facilities—all critical to supporting a full semiconductor ecosystem.

Strengthening Global Ties: The US Partnership

The recent collaboration with the US Department of State signals a strategic shift, enabling India to align itself with global semiconductor leaders. This partnership under the US's International Technology Security and Innovation (ITSI) fund, which comes as part of the CHIPS and Science Act, represents a $500-million initiative aimed at boosting semiconductor production globally. India and the US plan to conduct joint surveys of their respective ecosystems, aiming to identify potential initiatives that could strengthen both countries' positions in this industry.

One potential area of collaboration is India's Semi-Conductor Laboratory (SCL). As India’s only operational chip fabrication unit, its modernization is essential to stay competitive. Tripathi revealed that several proposals for SCL's upgrade are already being considered.

Growing Investments and Strategic Projects

India's semiconductor industry is also seeing significant investments from global players. Companies like Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Company (PSMC) have already secured approval for an $11-billion chip fabrication plant. Other major projects include partnerships between China’s Foxconn and India’s HCL Technologies, and a $10-billion fabrication facility in Maharashtra involving Israel’s Tower Semiconductor.

As these projects take shape, India's semiconductor ecosystem is on the verge of a transformation.

Challenges Ahead

Despite the optimistic developments, the road ahead isn't without challenges. Industry experts, such as Taiwan’s Yee-Shyi Chang, emphasize the need for India to train at least 10,000 engineers annually to support the growing semiconductor ecosystem. While India has a competitive edge in talent availability compared to other nations like the US, experts believe it could take 10 to 15 years for India's semiconductor industry to fully mature.

Conclusion: A Promising Future for India’s Semiconductor Ambitions

India’s concerted efforts to build a semiconductor ecosystem are progressing steadily, with growing investments, a strategic partnership with the US, and an evolving policy framework. While challenges exist, the country is poised to become a key player in the global semiconductor supply chain. With continued focus on talent development and industry support, India could become a major hub for semiconductor innovation in the coming decade.

Courtesy by: Business Standard