Shulou(Shulou.com)11/24 Report--

Beijing, September 26 (Xinhua) as the world's fifth-largest economy, India hopes to become a chip power and get a piece of the world's popular track. Like the US, India has been seeking to build strategic alliances around semiconductors and has taken action to bring chip manufacturing into the country and create incentives for the industry. However, why does India dare to have such ambitions when there are neither large chip design companies nor industry-leading chip manufacturers?

India is trying to attract giants without leading local semiconductor companies, so it is seeking the participation of foreign technology giants-one of the important strategies of the Indian government to develop the chip industry. In December, India gave the green light to a $10 billion incentive package for the semiconductor industry to attract semiconductor and display manufacturers, aimed at making India a key player in the global supply chain. Recently, India has also pledged to expand incentives and plans to provide financial support of up to 50 per cent of project costs to eligible manufacturers.

The huge investment in areas where India has an advantage, the time required to set up factories, and the uncertainty of the business, tax and trade environment are the main obstacles to investment in India.

"because of these problems, previous attempts in India have failed." Some analysts said.

However, there are signs that things are changing.

It is not impossible for India to become a global chip manufacturing center, according to an analysis by partners at Counterpoint Research, a technology consulting firm.

As the second most populous economy in the world, India has a huge domestic consumer market in semiconductors.

"in addition, India has a large number of English-speaking engineering talent and (cheap) labour, which makes it cost-effective," he added.

This well-educated, cheap labour can help India stand out in chip design, a specific area of the semiconductor supply chain, which requires a large number of skilled workers. Semiconductor design requires a large number of skilled engineers, and that is India's advantage.

In addition, analysts said that eight of the world's largest semiconductor companies have set up design institutes in India. Although it is still in its early stages, India is working hard to develop the technological construction of domestic companies.

"what we are seeing now is that the Indian government is trying to take the next step, but although it has design centres of multinational companies, India does not have much intellectual property of its own. So the next step should be to build an ecosystem so that Indian companies have some of their own IP."

India's IT and electronics minister has said that there are nearly 55000 semiconductor design engineers working for different companies in India. As part of the semiconductor program, India has launched a design-led program, "in the next five to six years, we will become the world's great semiconductor design capital."

Although analysts believe that India has certain advantages in developing chip design, the chip industry is beset with difficulties.

East Asian manufacturers, dominated by Chinese mainland, Taiwan and South Korea, dominate the global semiconductor supply chain, while India does not have any chip factories.

Knowing that the situation was not conducive to its semiconductor ambitions, India itself began to curry favor with foreign chipmakers, announcing a series of cooperation plans one after another. ISMC Digital, a consortium of investors, is planning to build a $3 billion manufacturing plant in India, and Israeli company Tower Semiconductor will be a technical partner in the project. Meanwhile, Foxconn, which assembles the iPhone for Apple, and Vedanta, an Indian mining company, have teamed up to announce that they will build a $19.5 billion chip factory in India.

The plant will be one of India's first semiconductor manufacturers, and India also hopes to attract giants such as TSMC and Intel to invest in India.

However, even if ISMC Digital goes into production in India, its chips belong to mid-and low-end chips, advanced process chips from companies such as TSMC are not comparable, and when national competition intensifies, this may limit India's potential to become a global chip manufacturing center.

"many countries are attracting chip giants with generous incentive schemes, so India may have to lower its expectations," analysts added.

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