India Urged to Partner with Taiwan and Japan for Semiconductor Growth
A report by research firm Elara Securities suggests that India should deepen its partnerships with countries like Taiwan and Japan to strengthen its presence in the semiconductor ecosystem.
Global Semiconductor Landscape
Taiwan holds a dominant position in semiconductor manufacturing, with its companies accounting for 78% of the world’s fab manufacturing and 53% of the assembly, testing, and packaging (ATMP) market. Despite this, Taiwanese firms have limited involvement in India’s nascent semiconductor industry.
Geopolitical Tensions and Diversification
Ongoing geopolitical tensions, particularly in the Taiwan Strait, have led Taiwanese semiconductor companies to diversify their operations abroad. Companies like TSMC and UMC are investing in fabs in the U.S., Japan, and Germany, focusing on both advanced and legacy chip production. However, no such collaborations with Indian companies have been announced.
Collaborations and Training
Japan is providing training to Indian workers, while Taiwan is investing in semiconductor clusters in Southeast Asia. Strengthening such collaborations could provide the much-needed expertise and investment to bolster India’s semiconductor ecosystem. A positive step is the Tata Group’s collaboration with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) to build a 28-nanometer fab plant.
Challenges and Opportunities
The report emphasizes the need for India to improve its infrastructure and manufacturing ecosystem to attract significant investments in the sector. It also highlights concerns about the talent pool, noting that many Indian students trained in Taiwan prefer to stay abroad, limiting the country’s ability to build a skilled domestic workforce.
India’s infrastructure, intellectual property protection, and regulatory environment also need improvement to attract global semiconductor manufacturers. On the global front, India has an opportunity to capitalize on shifting trade dynamics, positioning itself as a non-China alternative. Domestically, India’s demand for semiconductor chips is expected to surpass USD 100 billion by 2030, driven by the growing demand for electronic goods.
Doubts Revealed
Semiconductor -: A semiconductor is a material that can conduct electricity under some conditions but not others, making it a good medium for the control of electrical current. They are used in electronic devices like computers and smartphones.
Elara Securities -: Elara Securities is a financial services company that provides research and analysis on various industries and markets. They help investors make informed decisions.
TSMC -: TSMC stands for Taiwan Semiconductor Manufacturing Company. It is one of the world’s largest and most advanced semiconductor manufacturers.
Infrastructure -: Infrastructure refers to the basic physical systems and structures needed for the operation of a society or enterprise, like roads, bridges, and power supplies.
Talent retention -: Talent retention means keeping skilled and talented workers in a company or country, rather than losing them to other places or employers.
Tata Group -: The Tata Group is one of India’s largest and oldest conglomerates, with businesses in various sectors like steel, automobiles, and information technology.
PSMC -: PSMC stands for Powerchip Semiconductor Manufacturing Corporation, a Taiwanese company that makes semiconductor products.
28-nanometer fab plant -: A 28-nanometer fab plant is a factory that makes semiconductor chips with tiny features that are 28 nanometers wide. This is very small and allows for more powerful and efficient chips.
