India S Big Bid To Join The Global Semiconductor Race

The state’s industrial parks are home to international investors such as Renault-Nissan and Hyundai, which have large car factories. Dell makes computers there and Samsung makes TVs, washing machines and refrigerators. There are so many Apple suppliers (including Taiwan’s Foxconn and Pegatron and Finnish contract manufacturer Salcomp) that people in the Tamil Nadu business community commonly refer to the US tech group, which does not discuss its suppliers, as “the fruit company” . Now India wants to take a step up the manufacturing value chain with a high-stakes bid to start making semiconductors. The Modi government has put $10 billion in incentives on the table to entice manufacturers to set up new fabs and encourage investment in related sectors such as display glass. A factory is planned in Tamil Nadu. India’s ambition to enter the chip industry comes at a time of rising trade and geopolitical tension as Western economies have pushed to delink their supply chains from China, which has invested heavily to become a leader in the semiconductor industry. The Covid-19 pandemic and Beijing’s draconian lockdowns have disrupted global chip supply and sent companies and governments scrambling for alternative sources of production. India, which has fought Chinese social media apps and phone makers in a long-running geopolitical dispute, is offering itself as a democratic alternative tech hub to China. An employee at a Foxconn-owned phone factory in southern India. The Taiwanese giant has partnered with India’s Vedanta Group to build the country’s first semiconductor factory © Karen Dias/Bloomberg If successful, an Indian chipmaking industry has the potential to be hugely lucrative for the country, feeding rapidly growing global demand as well as its domestic industry’s voracious needs for the computers, appliances and cars it already manufactures. “From a geopolitical point of view, India is attractive. . . We are increasingly one of the largest consumers of semiconductors outside the US and traditional markets,” says Rajeev Chandrasekhar, India’s electronics and IT minister. Manufacturers are now lining up to accept the $10 billion offer. Singapore group IGSS Ventures has signed a memorandum of understanding with the Tamil Nadu government for what its founder and CEO Raj Kumar says will “very likely” be a wafer fab it wants to build within three years. Israel’s ISMC Group, a joint venture between Israel’s Tower Semiconductor and Abu Dhabi-based Next Orbit Ventures, has signed a letter of intent with Karnataka state, home to India’s technology capital Bangalore, to build a $3 semiconductor chip manufacturing plant billion And Foxconn has partnered with India’s Vedanta Group to build a semiconductor factory, surveying sites in the western Indian states of Gujarat and Maharashtra. Indian Prime Minister Narendra Modi’s “Make in India” campaign aims to turn Asia’s third-largest economy into a world laboratory © Saurabh Das/AP Young Liu, chairman of Foxconn, said on an investor call in August that the group would “actively expand” in India. While he declined to comment on specific products, he noted “improvements in the overall industry environment in India,” adding, “We believe India will play a very important role going forward.” Even given its geopolitical advantages, the road ahead will not be smooth for India as it seeks to position itself abroad as an alternative to China. There are risks inherent in the push, not least that Europe, the U.K., the U.S. and several other countries are simultaneously spending billions to subsidize the integration of chip manufacturing, in a move that analysts say is sure to increase global chip capacity . To have any chance of achieving its goal, India will need to move extremely quickly and decisively.

“Many shortcomings”

The complexity of semiconductor production and supply chains means that manufacturers in a few East Asian countries, led by China, Taiwan and South Korea, are responsible for much of the global supply. This is now changing. In July, the US passed the Chip and Science Act which includes $52 billion in grants to support chip manufacturing and research and development. Meanwhile, the EU is seeking to build resilience in semiconductors with its own €43 billion chip law. Although India does not yet manufacture microchips commercially, it contributes to semiconductor design because of its strong software base, says Mahinthan Joseph Mariasingham, a statistician and researcher at the Asian Development Bank. “When it comes to manufacturing, India has lagged behind many of the other countries, partly because of the lack of enabling infrastructure,” he says. “It was easy for them to enter the software market because it doesn’t require elaborate physical infrastructure.” A push into microchip production, which requires some of the most demanding factory conditions of any in manufacturing, would mark a major shift for India. The country has built a reputation as one of the world’s leading producers (and exporters) of engineering talent, but has struggled to capture a share of cutting-edge manufacturing technology relative to its 1.4 billion population that would approach that of China or Vietnam . Multinationals in lower-tech sectors have long struggled with the country’s sometimes erratic transport and public services. Manufacturing silicon chips requires the utmost precision: a power or water outage lasting just a few seconds can result in multi-million dollar losses. Power outages are common across much of India, prompting many companies to set up their own power supply. India’s traditional competitive advantage in low wages will give it little or no advantage in the capital-intensive business of chipmaking. There are also questions about whether the $10 billion will be money well spent. India has a tradition, dating back to its post-independence years, of disastrous import substitution policies — measures implemented to protect or promote local industries that ended up wasting money and holding back the broader economy. Some analysts believe India could better spend government money applying its proven strengths in cultivating skilled IT talent to design chips to make chips for the world instead of creating its own. “It’s an attempt to follow China’s path and create industry in India,” says Raghuram Rajan, a professor of economics at the University of Chicago Booth School of Business and a former governor of the Reserve Bank of India. “But you have to ask why people aren’t manufacturing in India. . . There are many reasons that the government itself accepts: we don’t have the logistics, we don’t have the utilities. Sometimes we don’t have R&D and workers. . . There are too many shortcomings.”

Revival of an industry

If manufacturers in India harbor any doubts about a nationwide foray into chipmaking, they are not voicing them. Instead, generous central government and local incentives to cover their initial costs – and a burst of nationalist rhetoric from the government – have been welcomed by Indian businesses. “This is India’s moment,” Anil Agarwal, president of natural resources group Vedanta, wrote in a LinkedIn post marking India’s 75th independence anniversary in August. Anil Agarwal, chairman of India’s Vedanta, describes the upcoming partnership with Foxconn to make chips in India as “a beautiful partnership” © Simon Dawson/Bloomberg “In the next 25 years, we will build the world’s leading technology hub, even better than Silicon Valley,” claimed the industrialist, who started his career as a scrap dealer in Mumbai. His subsequent rise through the metals and mining businesses to sit at the helm of a global diversified conglomerate is sometimes seen as an example of India’s rise up the corporate value chain. Vedanta is now set to be one of the first in the country to make chips, in what Agarwal describes as “a beautiful partnership” with Taiwan’s Foxconn, the world’s largest electronics contract manufacturer. “Most of the technology work will be done by Foxconn,” says Agarwal. The business, he adds, will produce both semiconductors and display glass, which Vedanta already makes in Japan, South Korea and Taiwan. For its part, Foxconn is giving little information about its plans for the venture, but notes that it has been an early mover in new markets in the past. “Foxconn is going places that no one is thinking of going at the time,” says Jimmy Huang, acting spokesman for the company, whose trade name is Hon Hai Technology Group. “Look at our global footprint and think about when we set up stores in each location. . . Today no one believes that India can build a semiconductor supply chain, but Foxconn is working with the government to build a semiconductor industry.” Madhav Kalyan, managing director of JPMorgan India, says the bank is advising a number of companies discussing financing for chip ventures in India. “They do believe, based on their interactions with the government and this dedicated body, that there is a nuanced understanding of what is needed — and that the government is willing to invest to make it happen,” he says. India’s IT minister Ashwini Vaishnaw unveiled New Delhi’s offer to chipmakers last December with the India Semiconductor Mission © Nathan Laine/Bloomberg New Delhi unveiled its offer to chipmakers…

title: “India S Big Bid To Join The Global Semiconductor Race Klmat” ShowToc: true date: “2022-11-26” author: “John Wallace”

The state’s industrial parks are home to international investors such as Renault-Nissan and Hyundai, which have large car factories. Dell makes computers there and Samsung makes TVs, washing machines and refrigerators. There are so many Apple suppliers (including Taiwan’s Foxconn and Pegatron and Finnish contract manufacturer Salcomp) that people in the Tamil Nadu business community commonly refer to the US tech group, which does not discuss its suppliers, as “the fruit company” . Now India wants to take a step up the manufacturing value chain with a high-stakes bid to start making semiconductors. The Modi government has put $10 billion in incentives on the table to entice manufacturers to set up new fabs and encourage investment in related sectors such as display glass. A factory is planned in Tamil Nadu. India’s ambition to enter the chip industry comes at a time of rising trade and geopolitical tension as Western economies have pushed to delink their supply chains from China, which has invested heavily to become a leader in the semiconductor industry. The Covid-19 pandemic and Beijing’s draconian lockdowns have disrupted global chip supply and sent companies and governments scrambling for alternative sources of production. India, which has fought Chinese social media apps and phone makers in a long-running geopolitical dispute, is offering itself as a democratic alternative tech hub to China. An employee at a Foxconn-owned phone factory in southern India. The Taiwanese giant has partnered with India’s Vedanta Group to build the country’s first semiconductor factory © Karen Dias/Bloomberg If successful, an Indian chipmaking industry has the potential to be hugely lucrative for the country, feeding rapidly growing global demand as well as its domestic industry’s voracious needs for the computers, appliances and cars it already manufactures. “From a geopolitical point of view, India is attractive. . . We are increasingly one of the largest consumers of semiconductors outside the US and traditional markets,” says Rajeev Chandrasekhar, India’s electronics and IT minister. Manufacturers are now lining up to accept the $10 billion offer. Singapore group IGSS Ventures has signed a memorandum of understanding with the Tamil Nadu government for what its founder and CEO Raj Kumar says will “very likely” be a wafer fab it wants to build within three years. Israel’s ISMC Group, a joint venture between Israel’s Tower Semiconductor and Abu Dhabi-based Next Orbit Ventures, has signed a letter of intent with Karnataka state, home to India’s technology capital Bangalore, to build a $3 semiconductor chip manufacturing plant billion And Foxconn has partnered with India’s Vedanta Group to build a semiconductor factory, surveying sites in the western Indian states of Gujarat and Maharashtra. Indian Prime Minister Narendra Modi’s “Make in India” campaign aims to turn Asia’s third-largest economy into a world laboratory © Saurabh Das/AP Young Liu, chairman of Foxconn, said on an investor call in August that the group would “actively expand” in India. While he declined to comment on specific products, he noted “improvements in the overall industry environment in India,” adding, “We believe India will play a very important role going forward.” Even given its geopolitical advantages, the road ahead will not be smooth for India as it seeks to position itself abroad as an alternative to China. There are risks inherent in the push, not least that Europe, the U.K., the U.S. and several other countries are simultaneously spending billions to subsidize the integration of chip manufacturing, in a move that analysts say is sure to increase global chip capacity . To have any chance of achieving its goal, India will need to move extremely quickly and decisively.

“Many shortcomings”

The complexity of semiconductor production and supply chains means that manufacturers in a few East Asian countries, led by China, Taiwan and South Korea, are responsible for much of the global supply. This is now changing. In July, the US passed the Chip and Science Act which includes $52 billion in grants to support chip manufacturing and research and development. Meanwhile, the EU is seeking to build resilience in semiconductors with its own €43 billion chip law. Although India does not yet manufacture microchips commercially, it contributes to semiconductor design because of its strong software base, says Mahinthan Joseph Mariasingham, a statistician and researcher at the Asian Development Bank. “When it comes to manufacturing, India has lagged behind many of the other countries, partly because of the lack of enabling infrastructure,” he says. “It was easy for them to enter the software market because it doesn’t require elaborate physical infrastructure.” A push into microchip production, which requires some of the most demanding factory conditions of any in manufacturing, would mark a major shift for India. The country has built a reputation as one of the world’s leading producers (and exporters) of engineering talent, but has struggled to capture a share of cutting-edge manufacturing technology relative to its 1.4 billion population that would approach that of China or Vietnam . Multinationals in lower-tech sectors have long struggled with the country’s sometimes erratic transport and public services. Manufacturing silicon chips requires the utmost precision: a power or water outage lasting just a few seconds can result in multi-million dollar losses. Power outages are common across much of India, prompting many companies to set up their own power supply. India’s traditional competitive advantage in low wages will give it little or no advantage in the capital-intensive business of chipmaking. There are also questions about whether the $10 billion will be money well spent. India has a tradition, dating back to its post-independence years, of disastrous import substitution policies — measures implemented to protect or promote local industries that ended up wasting money and holding back the broader economy. Some analysts believe India could better spend government money applying its proven strengths in cultivating skilled IT talent to design chips to make chips for the world instead of creating its own. “It’s an attempt to follow China’s path and create industry in India,” says Raghuram Rajan, a professor of economics at the University of Chicago Booth School of Business and a former governor of the Reserve Bank of India. “But you have to ask why people aren’t manufacturing in India. . . There are many reasons that the government itself accepts: we don’t have the logistics, we don’t have the utilities. Sometimes we don’t have R&D and workers. . . There are too many shortcomings.”

Revival of an industry

If manufacturers in India harbor any doubts about a nationwide foray into chipmaking, they are not voicing them. Instead, generous central government and local incentives to cover their initial costs – and a burst of nationalist rhetoric from the government – have been welcomed by Indian businesses. “This is India’s moment,” Anil Agarwal, president of natural resources group Vedanta, wrote in a LinkedIn post marking India’s 75th independence anniversary in August. Anil Agarwal, chairman of India’s Vedanta, describes the upcoming partnership with Foxconn to make chips in India as “a beautiful partnership” © Simon Dawson/Bloomberg “In the next 25 years, we will build the world’s leading technology hub, even better than Silicon Valley,” claimed the industrialist, who started his career as a scrap dealer in Mumbai. His subsequent rise through the metals and mining businesses to sit at the helm of a global diversified conglomerate is sometimes seen as an example of India’s rise up the corporate value chain. Vedanta is now set to be one of the first in the country to make chips, in what Agarwal describes as “a beautiful partnership” with Taiwan’s Foxconn, the world’s largest electronics contract manufacturer. “Most of the technology work will be done by Foxconn,” says Agarwal. The business, he adds, will produce both semiconductors and display glass, which Vedanta already makes in Japan, South Korea and Taiwan. For its part, Foxconn is giving little information about its plans for the venture, but notes that it has been an early mover in new markets in the past. “Foxconn is going places that no one is thinking of going at the time,” says Jimmy Huang, acting spokesman for the company, whose trade name is Hon Hai Technology Group. “Look at our global footprint and think about when we set up stores in each location. . . Today no one believes that India can build a semiconductor supply chain, but Foxconn is working with the government to build a semiconductor industry.” Madhav Kalyan, managing director of JPMorgan India, says the bank is advising a number of companies discussing financing for chip ventures in India. “They do believe, based on their interactions with the government and this dedicated body, that there is a nuanced understanding of what is needed — and that the government is willing to invest to make it happen,” he says. India’s IT minister Ashwini Vaishnaw unveiled New Delhi’s offer to chipmakers last December with the India Semiconductor Mission © Nathan Laine/Bloomberg New Delhi unveiled its offer to chipmakers…

title: “India S Big Bid To Join The Global Semiconductor Race Klmat” ShowToc: true date: “2022-12-15” author: “Jacob Escamilla”

The state’s industrial parks are home to international investors such as Renault-Nissan and Hyundai, which have large car factories. Dell makes computers there and Samsung makes TVs, washing machines and refrigerators. There are so many Apple suppliers (including Taiwan’s Foxconn and Pegatron and Finnish contract manufacturer Salcomp) that people in the Tamil Nadu business community commonly refer to the US tech group, which does not discuss its suppliers, as “the fruit company” . Now India wants to take a step up the manufacturing value chain with a high-stakes bid to start making semiconductors. The Modi government has put $10 billion in incentives on the table to entice manufacturers to set up new fabs and encourage investment in related sectors such as display glass. A factory is planned in Tamil Nadu. India’s ambition to enter the chip industry comes at a time of rising trade and geopolitical tension as Western economies have pushed to delink their supply chains from China, which has invested heavily to become a leader in the semiconductor industry. The Covid-19 pandemic and Beijing’s draconian lockdowns have disrupted global chip supply and sent companies and governments scrambling for alternative sources of production. India, which has fought Chinese social media apps and phone makers in a long-running geopolitical dispute, is offering itself as a democratic alternative tech hub to China. An employee at a Foxconn-owned phone factory in southern India. The Taiwanese giant has partnered with India’s Vedanta Group to build the country’s first semiconductor factory © Karen Dias/Bloomberg If successful, an Indian chipmaking industry has the potential to be hugely lucrative for the country, feeding rapidly growing global demand as well as its domestic industry’s voracious needs for the computers, appliances and cars it already manufactures. “From a geopolitical point of view, India is attractive. . . We are increasingly one of the largest consumers of semiconductors outside the US and traditional markets,” says Rajeev Chandrasekhar, India’s electronics and IT minister. Manufacturers are now lining up to accept the $10 billion offer. Singapore group IGSS Ventures has signed a memorandum of understanding with the Tamil Nadu government for what its founder and CEO Raj Kumar says will “very likely” be a wafer fab it wants to build within three years. Israel’s ISMC Group, a joint venture between Israel’s Tower Semiconductor and Abu Dhabi-based Next Orbit Ventures, has signed a letter of intent with Karnataka state, home to India’s technology capital Bangalore, to build a $3 semiconductor chip manufacturing plant billion And Foxconn has partnered with India’s Vedanta Group to build a semiconductor factory, surveying sites in the western Indian states of Gujarat and Maharashtra. Indian Prime Minister Narendra Modi’s “Make in India” campaign aims to turn Asia’s third-largest economy into a world laboratory © Saurabh Das/AP Young Liu, chairman of Foxconn, said on an investor call in August that the group would “actively expand” in India. While he declined to comment on specific products, he noted “improvements in the overall industry environment in India,” adding, “We believe India will play a very important role going forward.” Even given its geopolitical advantages, the road ahead will not be smooth for India as it seeks to position itself abroad as an alternative to China. There are risks inherent in the push, not least that Europe, the U.K., the U.S. and several other countries are simultaneously spending billions to subsidize the integration of chip manufacturing, in a move that analysts say is sure to increase global chip capacity . To have any chance of achieving its goal, India will need to move extremely quickly and decisively.

“Many shortcomings”

The complexity of semiconductor production and supply chains means that manufacturers in a few East Asian countries, led by China, Taiwan and South Korea, are responsible for much of the global supply. This is now changing. In July, the US passed the Chip and Science Act which includes $52 billion in grants to support chip manufacturing and research and development. Meanwhile, the EU is seeking to build resilience in semiconductors with its own €43 billion chip law. Although India does not yet manufacture microchips commercially, it contributes to semiconductor design because of its strong software base, says Mahinthan Joseph Mariasingham, a statistician and researcher at the Asian Development Bank. “When it comes to manufacturing, India has lagged behind many of the other countries, partly because of the lack of enabling infrastructure,” he says. “It was easy for them to enter the software market because it doesn’t require elaborate physical infrastructure.” A push into microchip production, which requires some of the most demanding factory conditions of any in manufacturing, would mark a major shift for India. The country has built a reputation as one of the world’s leading producers (and exporters) of engineering talent, but has struggled to capture a share of cutting-edge manufacturing technology relative to its 1.4 billion population that would approach that of China or Vietnam . Multinationals in lower-tech sectors have long struggled with the country’s sometimes erratic transport and public services. Manufacturing silicon chips requires the utmost precision: a power or water outage lasting just a few seconds can result in multi-million dollar losses. Power outages are common across much of India, prompting many companies to set up their own power supply. India’s traditional competitive advantage in low wages will give it little or no advantage in the capital-intensive business of chipmaking. There are also questions about whether the $10 billion will be money well spent. India has a tradition, dating back to its post-independence years, of disastrous import substitution policies — measures implemented to protect or promote local industries that ended up wasting money and holding back the broader economy. Some analysts believe India could better spend government money applying its proven strengths in cultivating skilled IT talent to design chips to make chips for the world instead of creating its own. “It’s an attempt to follow China’s path and create industry in India,” says Raghuram Rajan, a professor of economics at the University of Chicago Booth School of Business and a former governor of the Reserve Bank of India. “But you have to ask why people aren’t manufacturing in India. . . There are many reasons that the government itself accepts: we don’t have the logistics, we don’t have the utilities. Sometimes we don’t have R&D and workers. . . There are too many shortcomings.”

Revival of an industry

If manufacturers in India harbor any doubts about a nationwide foray into chipmaking, they are not voicing them. Instead, generous central government and local incentives to cover their initial costs – and a burst of nationalist rhetoric from the government – have been welcomed by Indian businesses. “This is India’s moment,” Anil Agarwal, president of natural resources group Vedanta, wrote in a LinkedIn post marking India’s 75th independence anniversary in August. Anil Agarwal, chairman of India’s Vedanta, describes the upcoming partnership with Foxconn to make chips in India as “a beautiful partnership” © Simon Dawson/Bloomberg “In the next 25 years, we will build the world’s leading technology hub, even better than Silicon Valley,” claimed the industrialist, who started his career as a scrap dealer in Mumbai. His subsequent rise through the metals and mining businesses to sit at the helm of a global diversified conglomerate is sometimes seen as an example of India’s rise up the corporate value chain. Vedanta is now set to be one of the first in the country to make chips, in what Agarwal describes as “a beautiful partnership” with Taiwan’s Foxconn, the world’s largest electronics contract manufacturer. “Most of the technology work will be done by Foxconn,” says Agarwal. The business, he adds, will produce both semiconductors and display glass, which Vedanta already makes in Japan, South Korea and Taiwan. For its part, Foxconn is giving little information about its plans for the venture, but notes that it has been an early mover in new markets in the past. “Foxconn is going places that no one is thinking of going at the time,” says Jimmy Huang, acting spokesman for the company, whose trade name is Hon Hai Technology Group. “Look at our global footprint and think about when we set up stores in each location. . . Today no one believes that India can build a semiconductor supply chain, but Foxconn is working with the government to build a semiconductor industry.” Madhav Kalyan, managing director of JPMorgan India, says the bank is advising a number of companies discussing financing for chip ventures in India. “They do believe, based on their interactions with the government and this dedicated body, that there is a nuanced understanding of what is needed — and that the government is willing to invest to make it happen,” he says. India’s IT minister Ashwini Vaishnaw unveiled New Delhi’s offer to chipmakers last December with the India Semiconductor Mission © Nathan Laine/Bloomberg New Delhi unveiled its offer to chipmakers…

title: “India S Big Bid To Join The Global Semiconductor Race Klmat” ShowToc: true date: “2022-12-06” author: “Rose Pickering”

The state’s industrial parks are home to international investors such as Renault-Nissan and Hyundai, which have large car factories. Dell makes computers there and Samsung makes TVs, washing machines and refrigerators. There are so many Apple suppliers (including Taiwan’s Foxconn and Pegatron and Finnish contract manufacturer Salcomp) that people in the Tamil Nadu business community commonly refer to the US tech group, which does not discuss its suppliers, as “the fruit company” . Now India wants to take a step up the manufacturing value chain with a high-stakes bid to start making semiconductors. The Modi government has put $10 billion in incentives on the table to entice manufacturers to set up new fabs and encourage investment in related sectors such as display glass. A factory is planned in Tamil Nadu. India’s ambition to enter the chip industry comes at a time of rising trade and geopolitical tension as Western economies have pushed to delink their supply chains from China, which has invested heavily to become a leader in the semiconductor industry. The Covid-19 pandemic and Beijing’s draconian lockdowns have disrupted global chip supply and sent companies and governments scrambling for alternative sources of production. India, which has fought Chinese social media apps and phone makers in a long-running geopolitical dispute, is offering itself as a democratic alternative tech hub to China. An employee at a Foxconn-owned phone factory in southern India. The Taiwanese giant has partnered with India’s Vedanta Group to build the country’s first semiconductor factory © Karen Dias/Bloomberg If successful, an Indian chipmaking industry has the potential to be hugely lucrative for the country, feeding rapidly growing global demand as well as its domestic industry’s voracious needs for the computers, appliances and cars it already manufactures. “From a geopolitical point of view, India is attractive. . . We are increasingly one of the largest consumers of semiconductors outside the US and traditional markets,” says Rajeev Chandrasekhar, India’s electronics and IT minister. Manufacturers are now lining up to accept the $10 billion offer. Singapore group IGSS Ventures has signed a memorandum of understanding with the Tamil Nadu government for what its founder and CEO Raj Kumar says will “very likely” be a wafer fab it wants to build within three years. Israel’s ISMC Group, a joint venture between Israel’s Tower Semiconductor and Abu Dhabi-based Next Orbit Ventures, has signed a letter of intent with Karnataka state, home to India’s technology capital Bangalore, to build a $3 semiconductor chip manufacturing plant billion And Foxconn has partnered with India’s Vedanta Group to build a semiconductor factory, surveying sites in the western Indian states of Gujarat and Maharashtra. Indian Prime Minister Narendra Modi’s “Make in India” campaign aims to turn Asia’s third-largest economy into a world laboratory © Saurabh Das/AP Young Liu, chairman of Foxconn, said on an investor call in August that the group would “actively expand” in India. While he declined to comment on specific products, he noted “improvements in the overall industry environment in India,” adding, “We believe India will play a very important role going forward.” Even given its geopolitical advantages, the road ahead will not be smooth for India as it seeks to position itself abroad as an alternative to China. There are risks inherent in the push, not least that Europe, the U.K., the U.S. and several other countries are simultaneously spending billions to subsidize the integration of chip manufacturing, in a move that analysts say is sure to increase global chip capacity . To have any chance of achieving its goal, India will need to move extremely quickly and decisively.

“Many shortcomings”

The complexity of semiconductor production and supply chains means that manufacturers in a few East Asian countries, led by China, Taiwan and South Korea, are responsible for much of the global supply. This is now changing. In July, the US passed the Chip and Science Act which includes $52 billion in grants to support chip manufacturing and research and development. Meanwhile, the EU is seeking to build resilience in semiconductors with its own €43 billion chip law. Although India does not yet manufacture microchips commercially, it contributes to semiconductor design because of its strong software base, says Mahinthan Joseph Mariasingham, a statistician and researcher at the Asian Development Bank. “When it comes to manufacturing, India has lagged behind many of the other countries, partly because of the lack of enabling infrastructure,” he says. “It was easy for them to enter the software market because it doesn’t require elaborate physical infrastructure.” A push into microchip production, which requires some of the most demanding factory conditions of any in manufacturing, would mark a major shift for India. The country has built a reputation as one of the world’s leading producers (and exporters) of engineering talent, but has struggled to capture a share of cutting-edge manufacturing technology relative to its 1.4 billion population that would approach that of China or Vietnam . Multinationals in lower-tech sectors have long struggled with the country’s sometimes erratic transport and public services. Manufacturing silicon chips requires the utmost precision: a power or water outage lasting just a few seconds can result in multi-million dollar losses. Power outages are common across much of India, prompting many companies to set up their own power supply. India’s traditional competitive advantage in low wages will give it little or no advantage in the capital-intensive business of chipmaking. There are also questions about whether the $10 billion will be money well spent. India has a tradition, dating back to its post-independence years, of disastrous import substitution policies — measures implemented to protect or promote local industries that ended up wasting money and holding back the broader economy. Some analysts believe India could better spend government money applying its proven strengths in cultivating skilled IT talent to design chips to make chips for the world instead of creating its own. “It’s an attempt to follow China’s path and create industry in India,” says Raghuram Rajan, a professor of economics at the University of Chicago Booth School of Business and a former governor of the Reserve Bank of India. “But you have to ask why people aren’t manufacturing in India. . . There are many reasons that the government itself accepts: we don’t have the logistics, we don’t have the utilities. Sometimes we don’t have R&D and workers. . . There are too many shortcomings.”

Revival of an industry

If manufacturers in India harbor any doubts about a nationwide foray into chipmaking, they are not voicing them. Instead, generous central government and local incentives to cover their initial costs – and a burst of nationalist rhetoric from the government – have been welcomed by Indian businesses. “This is India’s moment,” Anil Agarwal, president of natural resources group Vedanta, wrote in a LinkedIn post marking India’s 75th independence anniversary in August. Anil Agarwal, chairman of India’s Vedanta, describes the upcoming partnership with Foxconn to make chips in India as “a beautiful partnership” © Simon Dawson/Bloomberg “In the next 25 years, we will build the world’s leading technology hub, even better than Silicon Valley,” claimed the industrialist, who started his career as a scrap dealer in Mumbai. His subsequent rise through the metals and mining businesses to sit at the helm of a global diversified conglomerate is sometimes seen as an example of India’s rise up the corporate value chain. Vedanta is now set to be one of the first in the country to make chips, in what Agarwal describes as “a beautiful partnership” with Taiwan’s Foxconn, the world’s largest electronics contract manufacturer. “Most of the technology work will be done by Foxconn,” says Agarwal. The business, he adds, will produce both semiconductors and display glass, which Vedanta already makes in Japan, South Korea and Taiwan. For its part, Foxconn is giving little information about its plans for the venture, but notes that it has been an early mover in new markets in the past. “Foxconn is going places that no one is thinking of going at the time,” says Jimmy Huang, acting spokesman for the company, whose trade name is Hon Hai Technology Group. “Look at our global footprint and think about when we set up stores in each location. . . Today no one believes that India can build a semiconductor supply chain, but Foxconn is working with the government to build a semiconductor industry.” Madhav Kalyan, managing director of JPMorgan India, says the bank is advising a number of companies discussing financing for chip ventures in India. “They do believe, based on their interactions with the government and this dedicated body, that there is a nuanced understanding of what is needed — and that the government is willing to invest to make it happen,” he says. India’s IT minister Ashwini Vaishnaw unveiled New Delhi’s offer to chipmakers last December with the India Semiconductor Mission © Nathan Laine/Bloomberg New Delhi unveiled its offer to chipmakers…