Workers assemble smartphones at the Dixon Technologies factory in Uttar Pradesh, India, Thursday, January 28, 2021.
Bloomberg | Bloomberg | Getty Images
India has ambitions to become a semiconductor powerhouse as the world's fifth-largest economy pushes for self-reliance in manufacturing.
Indian Prime Minister Narendra Modi has set many goals to promote the development of the country's semiconductor industry. The latest and largest goal is to make the country's electronics industry from $155 billion Arrive today It will reach US$500 billion by 2030.
The news has raised eyebrows and concerns, and industry experts interviewed by CNBC had mixed opinions on whether the goal is realistic. However, they all agree on one thing: India cannot achieve this alone.
Eri Ikeda, assistant professor at the Department of Management Studies at the Indian Institute of Technology Delhi, said: “Although the development speed seems to be fast and the momentum is there, India has just begun to develop the semiconductor industry from scratch.”
Taiwan is currently the world's largest chip manufacturer, accounting for approximately 44% of the global market share, followed by China (28%), South Korea (12%), the United States (6%) and Japan (2%), data from Taiwanese consulting firm Trendforce said.
Bhatnagar noted how Taiwan's Powerchip Semiconductor Manufacturing Co. will help India's Tata Electronics build the country's The first 12-inch wafer fab In Gujarat. He also noted that U.S. chip manufacturers Micron Technology It plans to launch the first Indian-made semiconductor chips in 2025. analog devices corp. Signed with Tata Group protocol Explore manufacturing semiconductor products in India. He explained that these examples show that collaboration is necessary.
Lessons from China
India is increasingly seen as a viable alternative to China for companies seeking to diversify their supply chains amid geopolitical risks. However, analysts say India first needs to learn the ropes before it can compete with the East Asian giant, especially since its semiconductor manufacturing is still at a very nascent stage.
China regains its position India's largest trading partner In fiscal year 2024, bilateral trade volume between the two countries reached US$118.4 billion. According to data from the Indian Ministry of External Affairs, India imported telecom and smartphone parts from China worth US$4.2 billion.
“India is far behind China in semiconductor manufacturing. While India may be able to run faster and catch up, China will run faster,” said Rishi Bhatnagar, chairman of the Future Technologies Group of the British Institution of Engineering and Technology. . He added that cooperation, not competition, between the two countries was crucial.
“Even China is catching up with technological progress British Semiconductor and other countries, and establish and expand their semiconductor industry by importing large amounts of equipment from the United States and Japan,” Ikeda said in an interview with CNBC.
Show goodwill to the United States
Industry experts told CNBC that while India still relies heavily on top chipmakers Taiwan and China, the South Asian country plans to continue working with the United States to counter China.
In early September, the U.S. State Department announced that it would Partner with India Semiconductor Mission Collaborate with Indian electronics and information technology government agencies to improve the global semiconductor value chain.
Three days ago, the Biden administration introduced new export controls on key technologies including quantum computing and semiconductor products, a move that could limit Beijing's progress in artificial intelligence and computing.
Bhatnagar said that for the United States, India can help it diversify its chip sources and reduce its dependence on Taiwan.
“They are investing in a democratically elected country that has a legal framework and a growing number of English speakers. So when two democracies talk to each other, it's a very different discussion. We need to accept and agree that when the world This is necessary when scenarios arise that are changing,” said Bhatnagar.
Earlier this week, Modi met nvidia's Jen-Hsun Huang and GoogleTech CEOs like Sundar Pichai New York Roundtable After attending the annual Quad meeting. Huang said “this is India's moment” and pledged to work with India, hindustan times reported. CEOs of other semiconductor companies, such as Thomas Caulfield of GlobalFoundries and AMDLisa Su also attended.
The Biden administration announced on Monday that the United States and India will spend $90 million over the next five years to research artificial intelligence and semiconductor technology.
Bloomberg | Bloomberg | Getty Images
Other analysts say India's focus on semiconductors could help improve the United States' position in the ongoing “chip war” with China and ultimately help the country.
“India is willing to use investment from the United States and even China to develop industry, and if successful, India may eventually compete with them,” Ikeda said.
“Apple already exports more products from India than it sells in India.”
Tarun Pathak
Research Director, Counterpoint Research
However, she added that there are many obstacles before India can truly compete with China in the chip field, especially in terms of infrastructure and investment.
Piyush Goyal, India's Commerce Minister, said: “We strongly encourage the semiconductor industry. We are starting to build an ecosystem, which is crucial for us to see more and more foundries coming into India for actual chip manufacturing.” Industry insiders told CNBC in an interview Tanvir Gill said.
India prevails
Although India still has a long way to go before becoming a semiconductor powerhouse, it has many advantages working in its favor.
India has low labor costs, For example, China has become an attractive destination for companies looking to move parts of their supply chains away from China.
monthly The minimum wage for skilled workers in New Delhi is INR 21,215 ($253.85), while Beijing workers earn 2,420 yuan ($344.30) for the same period. The minimum wage in each country varies by state and province.
“If India can become more technologically advanced and meet global demand with cheaper and fair-quality products, it will have a competitive advantage over China,” Ikeda said.
The world's most populous country will become the world's second-largest economy by 2075, Goldman Sachs said, and has attracted investors including tech giants Apple and Google. Analysts predict these companies will further increase production in India.
Tarun Pathak, research director at Counterpoint Research, said: “Apple's products exported from India have exceeded the products sold in India. A huge domestic market and a young country give India an advantage.”
This optimism is expected to be bolstered over the next decade as the country continues to make significant progress in connecting and modernizing its roads, rail and airports.
In the interim budget in February, Finance Minister Nirmala Sitharaman expected capital expenditure to increase by 11.1% to 11.11 trillion rupees ($133.9 billion) in fiscal 2025, mainly focusing on railway and airport construction.
“The semiconductor industry does not need so many large ships and cargo. Chips are small items that can be transported in large quantities by airplane,” Bhatnagar said.
With the demand for wafers only increasing, India could be the solution for many companies looking to reduce costs and meet demand.
“I wouldn't bet against India going short,” said India Index and CEO Samir Kapadia. “When you look around the world, there are very few places where you see the infrastructure, the economy, the stability and the infrastructure needed to really make that happen.” labor force.