[ad_1]
The new expanded US-India technology partnership forged during Prime Minister Narendra Modi’s visit to Washington, D.C. identifies technology as the new geopolitical frontier. A key element of the partnership is the determination to diversify the global semiconductor supply chain, which is at the heart of the rivalry between the world’s first and second economic powers, the United States and China.
Semiconductors or chips are essential to almost every modern device, from the telephone to advanced defense systems, not to mention advanced AI-powered machines. But only a handful of countries are in the business of making chips, which are among the most advanced technologies in the world, and some only specialize in some aspects of it. The Covid-19 pandemic has exposed the US’s dependence on supply chains in Asia — four of the world’s top chipmakers are from Taiwan — at the same time as the trade and diplomacy war between Washington and Beijing and military tensions in the Taiwan Strait escalate.
After a media report on an alleged White House contingency plan to destroy the world’s largest chip-making plant in Taiwan in the event of a Chinese invasion, the South China Morning Post last October ran a headline, “Chips are the new oil and Taiwan is the new Saudi Arabia.”
Since 2020, the United States has taken a number of steps aimed at 1) denying China the use of semiconductor technology to prevent it from gaining high-tech world dominance, and 2) increasing its domestic chip manufacturing capacity. The Trump administration has listed Chinese telecoms giant Huawei and several assistive devices as a national security threat to the United States, and has restricted their access to chips from American companies.
The Biden administration maintained restrictions on Huawei — and introduced its own laws — effectively cutting off the world’s largest maker of 5G phones and other Chinese companies from semiconductors made with American tools and software.
In August 2022, Congress passed the CHIPS & Science Act, which provides $280 billion in new funding for domestic research and manufacturing of semiconductors in the United States.
The United States has also moved toward making friends with semiconductors in the Quad, with the leaders of Australia, Japan, India and the United States committing to building “resilient, diversified, and secure supply chains for critical and emerging technologies” over two summits in 2021 and 2022.
India-US iCET
Also at the 2022 Summit in Tokyo, President Biden and Prime Minister Modi announced the US-India Initiative on Critical and Emerging Technologies (iCET). In January of this year, National Security Adviser Ajit Doval and his US counterpart Jake Sullivan met in Washington to discuss broad areas of cooperation within the framework of iCET.
The initiatives included in the US-India joint statement in the technology basket during Modi’s visit flowed from a January meeting during which the two countries agreed to enhance bilateral cooperation on flexible supply chains, and to support the development of semiconductor design, manufacturing and manufacturing. India’s ecosystem, promoting the development of skilled workforce for the industry.
A task force jointly formed by the Semiconductor Industry Association of America and India Semiconductor Electronics Association along with the Government Semiconductor mission was to conduct a “readiness assessment” to identify “near-term opportunities and facilitate long-term strategic development of complementary semiconductor ecosystems.” “. The task force will also identify opportunities and challenges facing India’s role in the global semiconductor value chain.
During Modi’s visit, all of this was translated into a Memorandum of Understanding on Semiconductor Innovation and Supply Chain Partnership to promote business opportunities, research, talent and skills development. Micron Technology, a leading US semiconductor company, has announced a proposed investment of up to $825 million to build a facility in India, with the Indian government stepping in to raise the combined investment value to $2.75 billion. It is hoped that this will create up to 5,000 new direct jobs and 15,000 community jobs in the next five years.
Lam Research has announced a proposal to train 60,000 Indian engineers through its Semiverse Solution virtual manufacturing platform. Applied Materials announced a proposed investment of $400 million to establish a collaborative engineering center in India.
India chips challenge
India has earmarked 76,000 crore ($10 billion) for the semiconductor industry. While there is a lot of optimism, the mission has struggled. Three companies that applied to set up factories with the first tranche of government support — a joint venture between Foxconn-Vedanta, Singapore’s IGSS, and a joint venture between Next Orbit and chip consortium ISMC that was counting on Israel’s Tower Semiconductor as a technology partner — all failed to get off the ground for separate reasons.
The $3 billion ISMC-Tower plan reportedly foundered due to Intel’s planned takeover of Tower; The $19 billion Foxconn-Vedanta venture has not been able to finalize talks with European chip maker STMicroelectronics. and the withdrawal of the Singapore-based IGSS.
The government reopened applications with revised specifications on June 1, and Foxconn and Vedanta applied again. Applications will be accepted until December 2024, but it remains to be seen if an extended deadline without an expanded promise — applicants had hoped for greater government approval — will bring in the big players.
Three things are necessary to make chips: uninterrupted, uninterrupted power; Unlimited pure water supply; and the infrastructure of the chip industry – manufacturing plants that are highly specialized units. At present, there is no place in India that can guarantee a round-the-clock supply of power or water. Chip manufacturing also requires a highly skilled workforce. Industry experts have repeatedly said that chip making is “not the same as assembling a phone.”
The lack of a “chip ecosystem” is the reason why, despite political will, none of the major international chip makers have shown interest in India. Beyond the requirements for chip manufacturing, a huge array of ancillary industries must form, including electronics manufacturers that can create a domestic market for chips. Taiwan has long pushed India for a free trade pact and a bilateral investment pact to make it more attractive to TSMC, the world’s largest chip maker, to set up a base here, but Delhi has been reluctant.
Micron’s ad, as Minister of State for Electronics and Information Technology Rajiv Chandrasekhar told The Indian Express in an interview, is for semiconductor packaging. “Our strategy is that packaging will create a global presence for us in the labor market and supply chains, and we can use that ability to vertically integrate back into fabs (manufacturing). Certainly, obviously we expect that Micron, at some point, will also start making chips.” “.
Since India is unlikely to manufacture chips by 2024 when Micron hopes to have a factory ready to go in Gujarat, Chandrasekhar said the company will enter its “existing, mature supply chains.” These chains “will either move their plans to India and grow their own original value addition or may substitute some local equivalents when they reach that necessary quality and standard levels.”
The case of chip wars
In 2020, China was the largest semiconductor machinery market. Beijing’s “Made in China 2025” plan, launched in 2019, prioritized achieving self-sufficiency in semiconductors. But the export controls initiated by the United States — and more are in the pipeline — have made China’s task seem difficult, if not impossible. Japan also announced restrictions on semiconductor exports to China. The Japanese restrictions will come into effect from July. China criticized the move and warned of “consequences”. As the United States works with key partners to restrict China’s access to chip technology, China’s imports of chips from Japan, South Korea and Taiwan, part of the US-led “Chip 4 Alliance,” fell 20 percent in the first five months of 2023, according to to the latest trade figures. The US is also pressing the Netherlands to make similar moves — Dutch company ASML is the only manufacturer in the world of the deep UV lithography machines required to make certain types of chips. .
All things considered, India is said to be at least two decades behind the chip curve. It may take 10 to 20 years for the country to establish itself as a serious player in the semiconductor industry. For now, though, New Delhi has positioned itself in the global chip war, with a technology partnership that promises to take bilateral relations with the United States to the next level.
[ad_2]
