Any entity needs to have two things in order to rise up the ladder. One is under their direct control while another is indirectly controlled. The first is toiling hard and second is the elimination of the competition. Well, coincidentally, both things are happening simultaneously for India to build up its global chip market.
America unable to incentivise Chip manufacturers
American chip manufacturers are finding it hard to sustain themselves. None other than the Biden administration is responsible for it. Just like India’s PLI Scheme, Americans have a mechanism in place called CHIPS Act.
Americans brought this act in order to ensure that their chip manufacturing units keep getting regular supply of money and the other incentives needed to push the USA ahead of other Chip hegemons. This year’s budget under the act was $52 billion. Initially, the Act was meant to only incentivise domestic American chip makers, but later foreign companies were also included in it.
However, the initiative has come across a massive iceberg called lack of funds. It turns out that the American government is extremely slow in disbursing funds; an action which is a symbolical representation of Biden’s declining agility and mental fortitude.
Foreign investors are now being reluctant in investing in the American Chip making industry. Various companies have now told Biden administration to allocate funds or else they will start packing their bags. One of them is Taiwan’s GlobalWafers, world’s third-largest maker of semiconductor wafers.
Preparedness of India for Chip
As they say, value is subjective to every measure; one man’s trash is another man’s treasure. The companies which the Americans are treating as trash may turn out to be a treasure for India. There is a renewed focus in India for ‘Aatmanirbharta’ in Semiconductor chips.
Up until now, incentives worth Rs 2,30,000 crores have been provided to the sector. The biggest of them is Rs 76,000 crores worth of PLI scheme. As soon as the government announced PLI scheme for semiconductors, it received offers worth Rs 1.53 lakh crores to set up semiconductor and display plants. The aforementioned 3 joint ventures were chosen to drive the semiconductor journey of India.
Chip manufacturers are running away from established base
However, even such a humongous investment will prove to be penny for India. India has huge potential to capture the global chip market dominated by Taiwan, China, the USA, South Korea, Japan and the Netherlands.
Apparently, nearly 75 per cent of global chip market is dominated by Taiwan and China. Moreover, there is a rivalry between China and the USA in establishing their control over Taiwan. Taiwan’s domination in Chips is one of the main reasons behind it.
But, for the last few years, companies have been looking to establish their manufacturing units outside the aforementioned countries. Apart from hounding by the environmental lobby, lack of support from the local governments is also one of the reasons.
Xi Jinping administration has become an enemy of tech sector as a whole. Similarly, in the USA, Biden administration’s focus on freeloading to its population has left them no incentive to work, and hence contribute to manufacturing units, semiconductor being one of them. Why do you think Biden would pay companies for establishing their base? It was to hide this dirty secret.
In Taiwan as well, companies are facing criticism for negative effects of semiconductor manufacturing on local air and water. Moreover, these countries have median age in high numbers, due to which labour shortage could also emerge as a big problem in future.
India can jump on to the opportunity
All these circumstances make it easy for India to make a massive foray into the sector. India is set to witness massive uptick in the manufacturing of smart phones, radios, TVs, laptops, computers, Electric vehicles, advanced medical equipment among others. All of these require chips to operate.
Add to that the positive business sentiments in India. India is ready to welcome companies running away from China, Taiwan and the USA.
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