India recently signed an MoU with Singapore for developing its semiconductor ecosystem. Earlier, it signed similar pacts with the US, the EU, and Japan. What does signing of such MoUs signify and do they have any bearing on the companies which finally have to decide on investments?
India-Singapore semiconductor partnership
The memorandum of understanding (MOU) between India and Singapore assumes significance as India aims to establish itself as a global node for semiconductor manufacturing, driven by strong domestic demand in electronics, electric vehicles and manufacturing. As part of the plan, Singapore and India will focus on complementary strengths in their semiconductor ecosystems and tap opportunities to strengthen their respective supply chains. This will include government-led policy exchanges on ecosystem development, supply chain resilience, and workforce development. A parallel business-to-business co-operation forum will be established and led by Enterprise Singapore, part of Singapore’s trade and industry ministry, and the India Semiconductor Mission (ISM) to encourage private sector partnerships. The Ministry of Trade and Industry (MTI) Singapore and India’s ministry of electronics and information technology (MeitY) will establish a policy dialogue to facilitate discussions, oversee the implementation of the areas of collaboration, and exchange best practices, as per the MoU.
Singapore’s semiconductor ecosystem
Singapore has a well-developed semiconductor industry which plays an important role in the global semicond-uctor supply chain. As per the Singapore government, its semiconductor industry constitutes 7-8% of the country’s GDP, and contributes to around 10% of the global semiconductor output. About 20% of the world’s semiconductor equipment production also happens from Singapore. Nine of the world’s top 15 semiconductor firms including Texas Instruments, NXP, GlobalFoundries, Micron, Qualcomm, AMD and Applied Materials have set up shop in Singapore. Largely known for mature chip nodes (28 nm or above), it has players in all segments of the semiconductor value chain including integrated circuit (IC) design, assembly, packaging and testing, wafer fabrication, and components production.
What about MoUs with other countries?
Besides the MOU with Singapore, India has partnerships with the US, the EU, and Japan. India is a late entrant in the chip industry, and the MoUs are expected to help it leapfrog into the big league with the right policy initiatives making it attractive for chip majors to invest in India. The whole focus of these partnerships is to develop a resilient supply chain, free from the dependence on China for critical components.
Working with Japan, India will benefit by getting access to experience and knowledge in chemicals, materials and equipment, R&D, manufacturing and sales as well as training and development of human resources.
Again, the partnership between the US Department of State and the India Semiconductor Mission aims to explore opportunities to grow and diversify the global semiconductor ecosystem under the International Technology Security and Innovation (ITSI) Fund, created by the CHIPS Act of 2022. With the EU also, it’s about boosting cooperation for semiconductor research and innovation and advancement of technologies.
India’s semiconductor ecosystem
As a part of its Rs 76,000-crore semiconductor incentive scheme, the Indian government has approved five such projects worth Rs 1.52 lakh crore including a chip fabrication project by Tata Electronics and Taiwan’s PSMC. Other projects include chip assembly, testing and packaging by Micron, CG Power, Kaynes, and Tata Electronics. The first batch of chips from the Micron plant is likely to be ready in mid-2025. The government, so far, has committed close to Rs 62,000 crore for the five projects and is now looking at expanding the scheme. In a media interaction last week, electronics and IT minister Ashwini Vaishnaw said the new scheme is expected to be announced within 3-4 months. It will be an expanded version of Semicon 1.0 and will cover the entire value chain from materials, ingots and wafers to fabs and chip assembly units. There are 20 more proposals which the government is currently evaluating.
Do such pacts promise investments?
Not directly, but such MoUs do create a favourable environment and instill confidence in the industry which then perhaps looks favourably at India for investment purposes. Largely, the industry falls back on the governments of their respective countries if they look for any special dispensation or resolution of any policy irritant and here such MoUs help as they build government-to-government contact points, which can be tapped by the industry. For instance, the MoU with Singapore can help in technology-sharing, and research and development initiatives. Besides, India can also learn from Singapore about managing semiconductor industrial parks. Similar benefits can accrue from the ones signed with the US, the EU and Japan.
From: financialexpress
Financial News
