Can India assume greater role in semiconductor value chains?

As the global value chains reshuffle amidst a push for increased diversification, resilience, and security, India has become an increasingly competitive global player in advanced technology industries. US President, Joe Biden, and Indian PM, Narendra Modi, announced the US-India initiative on Critical and Emerging Technology (iCET) in May 2022 to elevate and expand strategic technology partnership and defense industrial cooperation. 

As part of the inaugural meeting of the iCET in January 2023, US-based Semiconductor Industry Association (SIA) and India Electronics and Semiconductor Association (IESA), agreed to develop a “readiness assessment” to identify near-term industry opportunities, facilitate the longer-term strategic development of their complementary semiconductor ecosystems. They also made recommendations to the US Department of Commerce and Government of India’s India Semiconductor Mission (ISM). 

Information Technology & Innovation Foundation (ITIF) was commissioned to undertake the assessment. A summary of ITIF’s initial findings was delivered to the Indian and US governments in June 2023. ITIF has now published its final report. ITIF organized an expert panel discussion about ITIF’s final report assessing India’s readiness to assume a greater role in global semiconductor value chains. 

How does its business and regulatory environment compare to other nations vying for competitive advantage in the industry? What policy steps is India taking to strengthen its position? How can United States and India collaborate and learn from each other as strategic partners?

The panelists were: Ashok Chandak, President, India Electronics & Semiconductor Association (IESA), Tarun Chhabra, Special Assistant to the President, Senior Director for Technology & National Security, National Security Council, The White House, Grant T. Harris, Assistant Secretary of Commerce Industry and Analysis, International Trade Administration (ITA), Ajay Kumar, Embassy of India, and John Neuffer, President and CEO, Semiconductor Industry Association (SIA).

Stephen Ezell, VP, Global Innovation Policy, and Director, Center for Life Sciences Innovation, Information Technology and Innovation Foundation (ITIF) was the moderator. An understanding was signed between US Secretary, Gina Armando, and Piyush Goyal, India Minister for Commerce and Industry.

Ezell said the factories that are producing chips, their production lines are sophisticated and complex. That's a challenge any nation faces. India already accounts for about 20 percent of semiconductor design. In the next 5 years, India has an opportunity to increase its ATMP strengths.

Making the opening remarks, Tarun Chhabra, The White House, noted that there has been an agreement in place between USA and India. We are also making progress on the defence side. There have also been advancements in quantum computing and telecom. We also have an agreement with ISRO. 

There is also the need to have better supply chains. Semiconductors is very high on that list. The USA's partnership with India is also high on agenda. India also set up an India Semiconductor Mission. We are working to further these investments. We are doing all that's needed to strengthen the partnership. We are looking forward to stepping up, and do co-development and co-production. We are strengthening partnerships with like-minded partners, as well.

Ajay Kumar, Embassy of India, complemented both SIA and IESA for the report. This is very critical for our purpose. SIA and IESA are together leading the Indian industry forward. Industries also need to seize the current India semiconductor moment. Indian government is committed toward this collaboration.

We have also seen Covid-19 recently. There were supply chain deficits, and semiconductors was not spared either. ISM has since come up with $10 billion plan. We are very proud to be working with Micron. Other companies are also looking at the semiconductor capacity. Gujarat state has come up with an additional proposal. We are working on number of proposals. 

The USA is now working to attract semiconductor investments in various states. In India, we are also doing the same thing, and attract investments to our states. We also bring a lot of value to the semiconductor supply chain, such as R&D and design. We are also very proud to have a talented STEM-educated graduates. We see USA as an important partner to work on different stages of the semiconductor value chain.

John Neuffer, SIA, added, that Government f India has been taking this initiative very seriously. India is now one of the most attractive places to invest. There were some problems with the first package. We gave them our views, and that was later adjusted. Now, India is heading in a good direction. There is always room for improvements.

There are some areas in trade policy where India can improve things, as it is critical. The window of opportunity is open now for India. This has caused lot of soul-searching. By 2030, the global semiconductor industry will cross $1 trillion. AI, automotive vehicles, electrical, etc., are all going to increase in demand. In the pandemic, we realized that we had some vulnerabilities. The East Asia accounted for 75 percent of chip production. A message to India is to move much faster.

Semiconductor hot sector
Chandak, IESA, stated that semiconductor has been a hot sector for the last couple of years. Lot of things have been covered in the report. We have to look beyond the report now. India stands out as a beacon of opportunity. We will become a developed nation by 2047. India and USA has to play important collaborative roles. 

Almost 20 percent of Indian designers are present worldwide in various segments. India has seen growth in electronics and semiconductors. India is also building strong relations with the USA. India was lagging behind in semiconductor manufacturing, but were on par in design. We also need to look at the semiconductor demand. Governments have been very supportive of semiconductor sector. They are looking to create design-led robust semiconductor manufacturing. 

We look forward to similar situation for semiconductors. This is a huge opportunity for both USA and India. Collaborations are now happening between the Indian and US companies. We should take this forward more vigorously. 

Ezell said that India is committed to building a stable government. There was the Provisions Bill as well. Ajay Kumar said that in the last decade, we have taken a number of steps for economic liberalization. We are also trying to make the semiconductor industry more attractive for our people. The industry has also told us about packages that they were getting from the other parts of the world. We have since had ground-breaking ceremony. 

Chandak added that things have changed dramatically over the last few years. India's ranking has changed on the ease of doing business. Apple is doing lot of manufacturing in India. Samsung is stepping up electronics manufacturing like a hockey stick. There are other things going on. We are skilling more to develop talent pool. The Government is also very committed. Things are really on a fast track. Foxconn, CG-Power, ASIP, Kaynes, etc., are all coming in. It is really working on the ground.

Neuffer, SIA, noted that these are all notable. There are lot of variables that we are looking at. There is too much clutter at the border in terms of customs clearance. We need to have smooth procedure at the border. We need a healthy trade policy. There is the ITA from 1997. By 2015, this was expanded, but India was not part of that. 

Manufacturers deal with many sophisticated equipment. We also need to move that. It is very important that India becomes part of the ITA. Designs are created all over the world. Any kind of tariffs for data flows can create some problems. We hope this can be tackled constructively. We also need more third party perspectives on India's readiness.

Ezell stated that there are countries that are not part of ITA. Countries need to provide zero in and zero out flow. Neuffer said that governments are also looking at other things. 

Global competition
Tarun Chhabra, The White House, stated that there is more global competition. We are focused on more coordination. India and Japan could enable more coordination. We also have some challenges. India has lot of strengths. We now need to dig into some of those. We are in a phase of the partnership where there is committment to get things done. We want to get int an environment where export controls are better enabled to help make deals. We can also turn over proofs of concepts. 

Ajay Kumar, Embassy of India, said we have learned quite a bit from global practices. We are seeing how USA states are working for getting investments.We are trying to do things more differently. USA also has government, industry, and academics working together. We are also picking up on industry-academia partnerships.

Ezell said that the world faces a shortage of STEM talent. India has a deep pool of talent. Chandak, IESA, said India has strength on design since 1985. Over 20 percent of global workforce is Indian talent. STEM pool is also quite large. India is very good in polishing the diamonds. We need to put the engineers coming out to the right paths. There are research collaborations that are also working. There is chip-to-silicon concept going on. 

The challenge remains on the manufacturing side. We need to create more skills for ATMP. Very soon, some fabs will be announced. We are looking at more collaborative approach. We are now organizing a conference on advanced packaging. India is looking forward to contributing to global success.

Neuffer, SIA, said lot of companies are developing coolest apps, and not semiconductors. Nine years ago, semiconductors were sort of sleepy. That has changed, following the pandemic. Tarun Chhabra, The White House, said CHIPS program has major focus on people development. India could become a key partner. Our labour colleagues need to be on the table with us, so that their views are also represented. 

More collaborations
Ajay Kumar, Embassy of India, talked about some collaborations with Purdue University and LAM Research. Training of 60,000 engineers is also going on at Lam Research's semiverse platform. AMD is also working on upgrading skilling. A little more effort is required from both governments to meet the supply chain needs.

Chandak concluded that we can have three to five fabs over the next five years. We are very ambitious. We want to collaborate with USA and other countries. We need to demonstrate that things have changed in India. With new announcements coming up, it will trigger more development across India.

Neuffer said companies had started small in India. There will be a fab in India some day. India has a good attitude right now. Ajay Kumar added that the aspiration of India has been growing. We have a breakthrough with Micron. We will have many more breakthroughs.