Sections

ideals
Business Essentials for Professionals



Markets
23/09/2024

India’s Semiconductor Strategy Gains Momentum As Global Chip Demand Soars




India’s Semiconductor Strategy Gains Momentum As Global Chip Demand Soars
India is rapidly positioning itself as a key player in the global semiconductor industry, with plans to become a significant alternative to Taiwan in chip manufacturing. India's Commerce and Industry Minister Piyush Goyal emphasized the nation's ambitions to build a strong semiconductor ecosystem, aiming to attract international companies and reduce reliance on existing global semiconductor hubs.
 
“We are encouraging [the] semiconductor industry in a big way. We started building up the ecosystem, which is essential before we can see more and more foundries coming into the country for the actual chip making,” Goyal said in an interview. He projected that India’s demand for semiconductor products will exceed $100 billion by 2030, and this figure is expected to grow exponentially. Interest in India's chip industry, he added, is expanding “by leaps and bounds.”
 
India’s strategic location, large workforce, and rule of law make it a compelling destination for foreign investments in the semiconductor space. As Goyal noted, India offers a “safe harbor” for businesses seeking to diversify operations away from regions like Taiwan, where global chip production has traditionally been concentrated. "It provides an alternative where you will always have a youthful population, huge demand, and you will have the rule of law to back it," Goyal said.
 
Prime Minister Narendra Modi has been actively promoting semiconductor production in India, with the inauguration of three plants this year alone. One of these plants is a joint venture between Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Corp., set to begin production by late 2025 or early 2026 in Gujarat state. These developments bring India closer to becoming a key semiconductor manufacturing hub in Asia, alongside Taiwan, South Korea, and the U.S.
 
India's semiconductor strategy also involves forging partnerships with other global powers. In 2021, the government approved a $10 billion incentive program designed to attract foreign semiconductor manufacturers. Goyal reiterated that the country is working to form stronger ties with key semiconductor nations like the U.S., to further bolster India’s role in the global supply chain.
 
The global semiconductor market is expected to experience significant shifts in the coming years. As of 2024, Taiwan holds about 44% of the global market share in chipmaking, with China, South Korea, and the U.S. accounting for smaller shares. However, analysts project that Taiwan’s share could shrink to 40% by 2027, with China’s growing by 3% during the same period. India’s efforts to become a semiconductor leader are timely as global demand for chips rises and countries diversify away from reliance on a single region.
 
In addition to the semiconductor push, Goyal reiterated India's stance on trade relations, notably rejecting the idea of joining the Regional Comprehensive Economic Partnership (RCEP), a trade agreement between 15 Asia-Pacific countries, including China. "India is not going to join the RCEP because neither did it reflect the guiding principles on which ASEAN was started, nor is it in the nation’s interest to do a free trade agreement with China,” Goyal said, emphasizing that India's focus on economic self-reliance is key to its trade policy.
 
While RCEP aims to account for about 30% of global GDP, India’s decision to abstain stems from concerns over its agricultural and small business sectors. “It was not in our farmers’ interest, RCEP did not reflect the aspirations of our small and micro-medium industries and sectors, and in some form, was nothing but a free trade agreement with China,” Goyal said. The minister criticized China’s economic practices, particularly its use of World Trade Organization policies to export low-quality, low-cost goods to other countries, affecting local industries.
 
In contrast, India’s approach to its semiconductor industry reflects a proactive stance in diversifying its economy, moving towards high-tech industries while fostering local growth. Goyal’s vision for India to become a semiconductor hub aligns with the government’s broader strategy of attracting foreign investment and securing a foothold in the global technology supply chain.
 
India’s ambitions in the semiconductor industry represent a pivotal shift, as the world seeks alternatives to traditional manufacturing hubs amid increasing geopolitical tensions and supply chain disruptions.
 
(Source:www.wrightresearch.in)

Christopher J. Mitchell

In the same section
< >

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc