India is attempting to establish itself as a competitive alternative to China in the semiconductor industry as the chip war between the US and China heats up. The previous week, an agreement between India and the United States was signed on establishing a semiconductor supply chain. Experts view this arrangement as a chance for both countries to lessen their reliance on China globally. The US Chips and Science Act and ISM (India Semiconductor Mission) have prompted the establishment of the MoU, which aims to create a cooperative structure for the semiconductor supply chain’s resilience and diversification. The government launched the India Semiconductor Mission to foster the expansion and development of the semiconductor industry there and advance India’s strategy for expanding the semiconductor and display manufacturing ecosystem.

semiconductor chip

The government launched the ISM to foster the expansion and development of the semiconductor industry

India aspires to be a major semiconductor manufacturer despite lacking domestic semiconductor manufacturing firms. India is concentrating on luring international chip producers to establish facilities in the nation. In order to secure funding for the production of displays and semiconductors, as well as to establish itself as a significant player in the global semiconductor supply chain, India approved the $10 billion incentive plan in 2021. For raw materials like chemicals, silicon wafers, and gases, the semiconductor industry depends on a convoluted worldwide supply chain.

Disruptions in the supply of resources due to the pandemic and geopolitical tensions have contributed to a semiconductor shortage, impacting devices ranging from servers and PCs to vehicle manufacturers. Presently, the manufacturing of semiconductor chips is dominated by China, Japan, South Korea, and the United States. India is collaborating with other nations to create a robust supply chain because it recognises the need to be competitive in an industry as important as semiconductors.

semiconductor chip

India is collaborating with other nations to create a robust supply chain

Nonetheless, given India’s resourcefulness and concentration on talent development, several industry experts believe it has the ability to evolve into a manufacturing hub in 3 to 4 years. With the recent adoption of the National Education Policy and new curricula created by the AICTE, India has a significant footprint of chip design expertise, as well as a very developed and robust chemical industry. In three to four years, India should be a nation that manufactures semiconductors thanks to strong policy support for hardware, including Product-linked incentives and Design-linked incentive programmes by the government.

The Memorandum between India and the US will assist both countries in removing regulatory obstacles to business and talent mobility and facilitate the long-term strategic development of a diverse semiconductor ecosystem as both countries are concentrating on creating resilient national semiconductor supply chains. The collaboration demonstrates another goal of the US, which is to create a US-led semiconductor ecosystem, which is to engage more with non-Chinese supply chains. India is the number 7 export destination for Chinese semiconductors.