“India’s role in the global ‘Chip alliance’: Shaping resilient supply chains”

The Foxconn-Vedanta Semiconductor cooperation to produce chips in India has been called off after the Taiwanese firm opted to dissolve the agreement. They blamed delays in turning their concept into reality as the basis for the breakup. Both corporations have decided to seek alternate partners in the future.

Vedanta announced in a statement made after the Foxconn contract had been terminated that they hold a license for production-grade 40 nm technology from a leading Integrated Device Manufacturer (IDM), with plans of obtaining a license for production-grade 28 nm as well. Foxconn, on the other hand, is in talks for a joint venture and technology cooperation with Taiwan’s chip-making behemoth Taiwan Semiconductor Manufacturing Co (TSMC) and Japan’s TMH Group to set up semiconductor fab facilities in India.Both companies lacked technical knowledge in chip manufacturing and plan to announce new partners soon.

The projected semiconductor plant was to be built in the Dholera Special Investment Region, in accordance with the ‘Gujarat Semiconductor Policy 2022-27.’ Gujarat has grand goals of transforming the region into an Electronics System Design & Manufacturing (ESDM) ecosystem. The Gujarat government has committed to offering substantial rebates on power, water, and land costs to promote this effort.

The central government, through the Ministry of Electronics and IT (MeitY), launched the ‘India Semiconductor Mission’ in 2021. This $10 billion program is aiming at turn Dholera SIR into a ‘Semicon City.’ The government has also launched the Production Linked Incentive (PLI) scheme for the electronics sector to further boost semiconductor manufacture in India. Companies that construct semiconductor manufacturing facilities can take advantage of a $1.7 billion incentive package, which includes programs such as Design Linked Incentive (DLI), Chips to Startup (C2S), and Scheme for Promotion of Electronic Components and Semiconductors (SPECS). The primary goal of these activities is to create 200,000 job opportunities over a five-year period.

The Prime Minister Narendra Modi recent visit to United States marked the new partnership in semiconductor supply chains and establishes a collaborative mechanism between the two governments to enhance the resilience and diversification of semiconductor supply chains.

During Prime Minister Narendra Modi’s recent visit to the United States, the two countries formed a new collaboration to enhance semiconductor supply chains and boost resilience and diversification. Micron Technology announced a $800 million investment in Gujarat to create a semiconductor assembly and testing facility as part of this growth.

Furthermore, Applied Materials, a leading materials engineering solutions provider for chip and display production, intends to open a collaborative engineering center in Bengaluru, with headquarters in Silicon Valley, California.

In addition, Lam Research Corporation, based in Fremont, announced plans to train up to 60,000 Indian engineers in nanotechnologies over the next decade.

In addition, the US Semiconductor Industry Association and the India Electronics Semiconductor Association (IESA) have produced an interim readiness assessment to highlight immediate industry possibilities and support long-term strategic development in complementary semiconductor ecosystems.

And to not fall behind The South Korean chipmaker SK Hynix is in contact with the Center to discuss the possibility of establishing a packaging plant there while also assessing India’s semiconductor manufacturing incentive program.

All of the foregoing developments demonstrate India’s growing relevance as a partner in the current “Chip alliance” of the United States, the Netherlands, Japan, Taiwan, and South Korea. The alliance’s goal is to improve the “security” and “resilience” of semiconductor supply chains, especially by lowering the world’s dependency on Chinese chips.

The Indo-Pacific economic framework of economic cooperation developed during the QUAD summit has positioned India as a top investment destination for critical industries in the Biden Administration. The framework attempts to establish a supply chain network among its players, increasing India’s attraction for investment in important areas.

One thought on ““India’s role in the global ‘Chip alliance’: Shaping resilient supply chains”

  1. What India needs is a fab (short for fabrication) plant. I believe the deal with Micron is only for assembly. That is (i.e., assembly) good for short term employment generation, but in the long run it is not going to help India in its strategic and security goals.
    Fabs are very expensive and require very skilled engineers, scientists and the workforce. The cost may not be an obstacle for India’s entry. but available skilled people, infrastructure and environment could be a challenge (that could be overcome !!!).

    A few years back I had heard Prithviraj Chavan (Maha CM from Congress) in a talk arranged by Loksatta saying that his govt was ready invest about 2B dollars if any body wanted to enter into semiconductor fabrication. That was about 12-15 years back, but we should expect a real, practical and a quick solution from Modi’s govt soon with proper steps taken !!!

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