How India spends tens of billions of dollars to enter the semiconductor competition, focusing on mature chips, but the prospects are doubtful



  Recently, the Indian government has been making continuous efforts in the field of semiconductor R&D and manufacturing, hoping to support the development of the local semiconductor industry through government support funds and a broad domestic market.


  Pranay Kotasthane, chair of the high-tech geopolitics program at the Takshashila Institution in India, recently predicted that India, the world's fifth-largest economy, will play a crucial role in semiconductors.


  However, the reality is: India is not currently one of the major players in the semiconductor industry, with very few large chip companies and no leading manufacturing companies.


  According to Indian Prime Minister Moody's plan, it hopes to attract foreign giants to participate through industry incentives.


  Focus on mature chips


  In December, India approved a $10 billion semiconductor industry incentive scheme, with the government paying half the cost of all projects to revive the country's semiconductor industry.


  In June, sources further claimed that India would spend $30 billion to reform the tech industry and build a chip supply chain. Of that, $10 billion will be invested in building two chip factories and two display factories.


  In addition, the Indian government will provide about $7 billion in funding to the electronics industry to attract semiconductor players such as Foxconn and Pegatron.


  On September 13, Foxconn and India's Vedanta announced that they will jointly invest in a semiconductor manufacturing plant in India, with a total investment of $19.5 billion, which is expected to be put into operation in 2024.


  Previously, companies such as Singapore's IGSS Ventures, UAE's NextOrbit and Israel's Tower Semiconductor have all announced the establishment of chip manufacturing plants in India.


  These factories will become the first semiconductor manufacturing factories in India, but according to the current information, most of India's semiconductor manufacturing is concentrated in mature chips, and the specifications are mostly between 65 nanometers and 28 nanometers.


  Advanced fabs are important, but global demand for mature chips isn't going away anytime soon, Kotasthane said. 5G technology and electric vehicles still require a large number of mature chips, and most of the current defense applications also require mature chips.


  The advantage is not enough to break the game


  India has obvious advantages in the global semiconductor industry competition, such as manpower.


  Semiconductor design requires a lot of skilled engineers, Kotasthane said. According to India's Minister of Electronics and Information Technology, there are nearly 55,000 semiconductor design engineers in India, accounting for 20% of such professionals in the world.


  In addition, the Indian government has also launched a plan to help chip design, aiming to attract global chip design engineers to India for development.


  Another advantage is the fast-growing market. India has the second largest population in the world and has a huge domestic consumer market.

According to the data, India’s semiconductor market is worth $27.2 billion in 2021 and will reach $64 billion by 2026, with a compound annual growth rate expected to reach nearly 19%.


  According to Indian officials, by 2030, India's semiconductor demand will reach 110 billion US dollars, which will exceed 10% of global demand. This is indeed no small temptation for semiconductor companies.


  However, the high growth cannot hide the fact that India's foundation is weak. Judging from the recent business performance, India still has no small problems in attracting foreign investment. Many foreign companies have recently chosen to curtail or withdraw their investment in India.


  Lin Minwang, researcher and researcher of international studies at Fudan University, said that after joining the Indian incentive plan for a period of time, semiconductor manufacturers may feel a sense of tastelessness: on the one hand, the difficult local business environment in India makes them reluctant to increase investment, on the other hand, they do not want to increase investment. Willing to withdraw from the country with previous investment.


  In addition, the global chip competition also makes India's incentive plan obviously not so dazzling. Economies including the United States and the European Union are spending huge sums of money to attract semiconductor giants to set up factories. Therefore, India's strides in this field are likely to only be exists as expected.

source:  sina technology

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