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Semi CEO says India Requires Diverse Suppliers for Chip Industry Success

ByYasmeeta Oon

May 30, 2024
Semi CEO says India Requires Diverse Suppliers for Chip Industry Success

Semi CEO says India Requires Diverse Suppliers for Chip Industry Success

India must attract a more diverse array of semiconductor suppliers to develop a robust chip industry, according to Ajit Manocha, President and CEO of the influential trade association Semi. During an interview on Thursday, Manocha emphasized the necessity of creating a comprehensive ecosystem to support the semiconductor industry.

“They need to really increase the emphasis on the ecosystem because, without an ecosystem, growth will be limited,” Manocha stated. “They need to encourage smaller- and medium-sized companies to come and set up shop in India.”

Governments worldwide are investing aggressively to establish domestic supplies of semiconductors, essential components for everything from smartphones to artificial intelligence. India’s effort is considered a long shot due to the advantages held by countries like the US, China, and Malaysia.

Indian Prime Minister Narendra Modi has established a US$10 billion fund to attract global chipmakers such as Taiwan Semiconductor Manufacturing Co (TSMC), the leading provider of chips for companies like Apple Inc and Nvidia Corp. According to Manocha, if Modi secures a third term, the country is likely to expand the program beyond US$10 billion to help create a comprehensive ecosystem.

Despite the ambitious fund, no major semiconductor firms have committed to significant investments in India so far, partly due to infrastructure challenges, including a stable power supply. The most high-profile projects currently are an US$11 billion site by Tata Group in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp to produce mature chips, and a US$2.75 billion assembly and testing facility by US-based Micron Technology Inc.

The crucial role of smaller companies in the chip ecosystem is evident in TSMC’s efforts in the US, where it has pledged to build three advanced chip plants. The Taiwanese company has brought dozens of vendors to Arizona to support its operations. Manocha noted that India could benefit from similar strategies.

Speaking from the sidelines of the India-Taiwan Semiconductor Forum in Taipei, Manocha asserted that India is on the right track. The Tata and Micron projects can serve as catalysts for the country’s plans to establish a technological foundation.

India’s Semiconductor Industry Development Plan
ProjectInvestment AmountKey PlayersFocus
Tata Group & Powerchip SemiconductorUS$11 billionTata Group, Powerchip SemiconductorMature chip manufacturing
Micron Technology Assembly & TestingUS$2.75 billionMicron Technology IncAssembly and testing
Government FundUS$10 billionIndian GovernmentAttracting global chipmakers
  • Prime Minister Narendra Modi’s US$10 billion fund aims to attract global chipmakers.
  • Ajit Manocha emphasizes the need for a comprehensive semiconductor ecosystem.
  • Infrastructure challenges, including a stable power supply, hinder major investments.
  • High-profile projects by Tata Group and Micron Technology show potential.
  • Smaller companies play a crucial role in establishing a robust chip industry.

Creating a robust semiconductor ecosystem involves more than attracting large multinational corporations. Smaller- and medium-sized companies are vital to the ecosystem, providing the necessary support and innovation to sustain and grow the industry. Manocha believes that India must focus on attracting these smaller players to build a resilient and comprehensive semiconductor industry.

“The ecosystem includes not just the manufacturers but also suppliers, vendors, and other ancillary services that are critical for the semiconductor industry,” Manocha explained. “India needs to build this complete ecosystem to ensure sustainable growth in the semiconductor sector.”

Governments in several countries have recognized the strategic importance of semiconductors and are investing heavily to boost their domestic industries. For example, the US has implemented the CHIPS for America Act, aiming to strengthen its semiconductor manufacturing capabilities. China, too, has poured substantial resources into becoming a global leader in semiconductor production.

India’s approach, with the establishment of the US$10 billion fund, aligns with these global strategies. However, the unique challenges India faces, such as infrastructure deficiencies and the need for a skilled workforce, require tailored solutions.

Modi’s government has already made significant strides in improving infrastructure and promoting education and training in technology and engineering. These efforts are crucial to creating an environment conducive to the growth of the semiconductor industry.

The journey to establishing a robust semiconductor industry in India is fraught with challenges but also holds immense potential. The strategic investments by the government and the involvement of key players like Tata Group and Micron Technology are promising signs. However, sustained efforts to build a comprehensive ecosystem and address infrastructure issues are essential for long-term success.

“The semiconductor industry is the backbone of modern technology, and India’s ambition to become a significant player in this field is commendable,” Manocha concluded. “With the right strategies and investments, India can build a robust and competitive semiconductor industry that can drive technological advancement and economic growth.”

As India continues its efforts to attract a broader range of semiconductor suppliers, the focus must remain on creating a supportive ecosystem, improving infrastructure, and fostering innovation. These steps will be critical in transforming India’s semiconductor aspirations into reality.

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Featured Image courtesy of DALL-E by ChatGPT

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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