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Less than two weeks before Prime Minister Narendra Modi’s scheduled visit to the United States, Washington announced a new collaboration with India focused on exploring opportunities within the semiconductor supply chain. The initiative will involve a thorough review of India’s current semiconductor ecosystem, including its regulatory environment, workforce capabilities, and infrastructure requirements. This evaluation will serve as a foundation for future collaborative projects aimed at strengthening and expanding this vital industry, according to a statement from the US.
This development follows India’s recent signing of a semiconductor ecosystem agreement with Singapore during Modi’s trip last week.
Modi is expected to travel to the US from September 21 to 24, where he will participate in the Quad leaders’ summit, the Summit of the Future, and an event with the Indian diaspora.
The initiative will involve a thorough review of India’s current semiconductor ecosystem, including its regulatory environment, workforce capabilities, and infrastructure requirements.
According to a statement released Monday by the US Department of State, it will collaborate with the India Semiconductor Mission, under India’s Ministry of Electronics and Information Technology, to identify ways to expand and diversify the global semiconductor landscape. This initiative will be funded by the International Technology Security and Innovation (ITSI) Fund, established under the CHIPS Act of 2022.
The partnership aims to build a more resilient, secure, and sustainable global semiconductor supply chain, the statement added.
Detailing the framework of the new partnership, the statement outlined that the initial phase will involve a thorough assessment of India’s semiconductor ecosystem, regulatory landscape, workforce capacity, and infrastructure needs. The U.S. Department of State expects that key Indian stakeholders, including state governments, academic institutions, research centers, and private companies, will participate in this analysis, which will be led by the India Semiconductor Mission. Insights from this assessment will serve as the foundation for future collaborative initiatives to strengthen and expand this crucial sector.
The U.S. Department of State expects that key Indian stakeholders, including state governments, academic institutions, research centers, and private companies, will participate in this analysis, which will be led by the India Semiconductor Mission.
Highlighting the importance of the U.S.-India partnership in sustaining the global semiconductor supply chain, the statement noted that the ongoing digital transformation relies heavily on the strength and resilience of this supply chain, essential for products ranging from cars to medical devices. The collaboration between the U.S. and India presents an opportunity to grow India’s semiconductor industry, benefiting both countries.
In August 2022, U.S. President Joe Biden signed the CHIPS Act, which allocated significant funding to boost domestic semiconductor manufacturing and research. The Act also created the International Technology Security and Innovation (ITSI) Fund, providing the U.S. Department of State with $500 million over five years to promote secure telecommunications technologies and strengthen semiconductor supply chains in collaboration with global allies.
The CHIPS and Science Act aims to bring microchip production back to the U.S. after years of outsourcing. In 1990, the U.S. produced nearly 40% of the world’s semiconductors, a figure that has since fallen to just 12%. Meanwhile, Taiwan now produces more than 60% of the world’s semiconductor supply, including over 90% of the most advanced chips, according to the Council on Foreign Relations.
The geo-strategic and geo-economic significance of semiconductor chips, essential for everything from military technology to consumer electronics, underpins India’s partnerships with Singapore and the U.S. Supply chain disruptions caused by the Covid-19 pandemic, coupled with rising geopolitical tensions due to China’s aggressive actions in the Taiwan Strait and South China Sea, have accelerated India’s push to build its own semiconductor ecosystem.
The CHIPS and Science Act aims to bring microchip production back to the U.S. after years of outsourcing. In 1990, the U.S. produced nearly 40% of the world’s semiconductors, a figure that has since fallen to just 12%.
India is a relatively new player in the high-tech semiconductor industry, which is dominated by companies from a handful of countries. The India Semiconductor Mission, launched in 2021, introduced a Rs 76,000 crore incentive scheme offering government subsidies covering half of the capital expenditure for new plants.
In February, the Indian government approved semiconductor projects with a total investment of around Rs 1.26 lakh crore. That same month, it announced a partnership between the Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) to establish a semiconductor fabrication plant in Gujarat. So far, the government has approved five semiconductor units, including four assembly plants, under the incentive program.
