India-US chip partnership could boost global chip supply chain

India is making an attempt to emerge as a aggressive various to China within the semiconductor sector amid heightened chip warfare between the US and China.India and the US final week signed a memorandum of understanding on establishing a semiconductor provide chain, which specialists see as a possibility for each nations to scale back world dependency on China.“The MoU seeks to ascertain a collaborative mechanism for the semiconductor provide chain resiliency and diversification in view of the US CHIPS and Science Act and India Semiconductor Mission (ISM),” mentioned Charlie Dai, vp, and analysis director at analysis agency Forrester.ISM is a authorities initiative aimed to advertise the expansion and improvement of the semiconductor trade in India and to drive India’s methods for growing the semiconductors and show manufacturing ecosystem.India goals to be a key semiconductor playerAlthough India doesn’t have native semiconductor manufacturing companies, the nation has been specializing in attracting world chip makers to arrange services within the nation. In December 2021, India authorised a $10 billion incentive plan to draw investments for semiconductor manufacturing and show manufacturing and to develop into a key participant within the world semiconductor provide chain.The semiconductor trade depends on a posh world provide chain for uncooked supplies comparable to silicon wafers, chemical compounds, and gases. Disruptions within the provide of supplies because of the pandemic and geopolitical tensions have contributed to a semiconductor scarcity, impacting merchandise starting from servers and PCs to car manufacturing. The pandemic has set companies throughout geographies fascinated with deal with the provision chain disruption, which is essentially a results of overdependence on only a few international locations for chips.Taiwan, South Korea, Japan, the US, and China are presently the key gamers in chip manufacturing. With the US being more and more apprehensive over China’s rising geopolitical energy, which rests partially on its manufacturing capabilities, US President Joe Biden’s administration has been issuing sweeping restrictions on exports of chip know-how to China.All these have made India a possible candy spot for chip know-how improvement and presumably a key hyperlink to the worldwide semiconductor provide chain.The newest US-India partnership alerts that the US considers India to be a future associate in constructing a resilient provide chain, mentioned Gaurav Gupta, an analyst at analysis agency Gartner.Nevertheless, contemplating the “complete semiconductor area, which incorporates uncooked silicon wafers; chip design; wafer fabrication; meeting together with check and packaging; uncooked supplies together with chemical compounds, and EDA [electronic design automation] — the one space the place India has a good presence at this time is in chip design or what can be thought-about to be a part of the fabless ecosystem,” Gupta mentioned. Understanding the necessity for being aggressive in a sector that’s as important as semiconductors, India is working to create a resilient provide chain together with different international locations.In September 2021, the Quad Alliance — comprising India, the US, Japan, and Australia — collaborated to safe provide chains in semiconductors and 5G telecom applied sciences in a transfer to clip the rising affect of China.“If profitable, India might be part of the worldwide semiconductor provide chain, particularly in manufacturing, the place about 75% of the share is held by China, Taiwan, S. Korea, and Japan. The concept is to have a balanced regional distribution of chip manufacturing share for the longer term — so you’ll be able to have a greater response to any logistics or geopolitical crises, like what occurred throughout the pandemic,” Gupta mentioned.A very powerful process now for India is to exhibit its first industrial fab, in response to Gupta. Simply this week, Indian IT Minister Ashwini Vaishnav mentioned that the nation is about to announce its first semiconductor fabrication facility, deciding on a proposal from considered one of three worldwide bidders: a Vedanta-Foxconn three way partnership, the Worldwide Semiconductor Consortium (ISMC), and Singapore’s IGSS Ventures.If one of many proposals strikes forward quickly it may take three or 4 years earlier than fabricated wafers may be shipped to clients, Gupta mentioned. For an outsourced semiconductor meeting and check (OSAT), the timeline might be two and a half to a few years, he mentioned.“At this level, I received’t actually deal with when India turns into a viable various towards the established international locations. The present precedence is to take small steps and show that it may be a participant on this area. We’ve authorities schemes, proposals, curiosity, and agreements, however the important thing could be how and when tasks are literally executed,” Gupta mentioned.India may develop into a key chip maker in 3-4 yearsHowever, some specialists consider that India has the potential to develop into a producing nation in a span of three to 4 years, given the nation is resourceful and is placing a lot emphasis on ability improvement.“There’s a very giant footprint of chip design prowess in India with a really superior and strong chemical trade. With the promulgation of NEP [national education policy], new syllabi design by AICTE [All India Council for Technical Education] not too long ago and a big coverage impetus on {hardware} together with PLI [product-linked incentive] and DLI [design-linked incentives] schemes by the federal government, India needs to be a semiconductor manufacturing nation in three to 4 years,” mentioned Anurag Awasthi, vp of the trade physique for electronics system design and manufacturing sector, IESA.As each India and the US are specializing in constructing resilient nationwide semiconductor provide chains, the India-US MoU will assist each international locations to resolve regulatory boundaries to enterprise and expertise mobility in each international locations and facilitate the longer-term strategic improvement of diversified semiconductor ecosystems, Forrester’s Dai mentioned.Not solely is the MoU anticipated to result in larger cooperation in tech improvement between the US and India, however it would additionally doubtless gasoline enterprise funding within the semiconductor sector, mentioned Helen Chiang, Asia/Pacific Semiconductor Analysis Lead and Basic Supervisor of IDC Taiwan. “The cooperation additionally reveals that the US hopes to have extra partnerships with non-China provide chains to construct a US-led semiconductor ecosystem. India is the highest seventh nation for China semiconductor exports; the extra in-depth relationship with the US might be a possible concern for China long run.”

Copyright © 2023 IDG Communications, Inc.