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QUAD supports India’s Semiconductor Ambitions to counter China’s aggression towards Taiwan

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The Quad partners of India — Japan, USA and Australia — extended their support to the country’s semiconductor mission, assuring support ranging from providing critical minerals to training experts.

The top officials of the three countries — Mike Hankey, consul general at the US Embassy in India; Kyoko Hokugo, the minister for economy and development at Japanese Embassy in India; and Georgina McKay, deputy high commissioner to India in Australian Embassy — participated in a panel discussion along with Arijit Raychowdhury, a professor from Georgia Tech University. The panel discussion at Semicon India 2023 was moderated by National Security Council Secretariat (NSCS) member Anshuman Tripathi.

Hokugo said that Japan is focusing on both general-purpose tech and cutting-edge tech with various initiatives.

“It is logical to see India as an important partner for cooperation in this field. We already have a Japan-India semiconductor supply chain partnership. Since Indians account for around 20% of the talent in top global companies, we are highly interested in developing human resources,” she said.

Hankey said that the initiatives such as Innovation Bridge between India and the US would establish both
government-to-government and people-to-people connect. “The US is making about 10% of the semiconductors. Due to the process involved, its production is carried out only at a few places in the world.

The goal is to de-risk the economy with a safe, secure, diversified global ecosystem,” he said. McKay said that Australia has already established a $1 billion reconstruction fund for critical and core technologies. She said that the country has remained a reliable exporter of critical minerals for semiconductors and has been a major player in quantum computing. The experts stressed strengthening startups, education initiatives and international collaborations to develop the semiconductor sector.

India betting big on Semiconductor mission

“We are on track to do in the next 10 years with these $10 billion what countries like China took 25-30 years and could not succeed,” Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said earlier this week.

The minister was referring to India’s Production Linked Incentive (PLI) scheme for companies setting up fabs for semiconductors and displays ahead of the three-day SemiconIndia 2023 conference at Gandhinagar in Gujarat.

China’s intentions

Before the chip-war with the US, China’s plans worked well with most global companies setting up capacities there. This enabled the country to develop its own capabilities apart from acquiring technologies needed to build legacy chips.

For instance, China has gained significant lead in the back end of the semiconductor value chain, with market shares in chip design, trailing-edge wafer capacity (legacy chips) and ATP (Assembly, Test and Packaging) that are larger than European companies.

To illustrate, 90 percent of the revenues of SMIC, China’s largest foundry, came from mature nodes of 40-250 nm in 2019. However, this is where the US wants to contain China.

US-China deadlock on Taiwan

The US Chips Act, announced in August 2022, seeks to choke off access to all matured chip making technologies for China, whose success in mastering chip technologies is the very cause for fear in the West. At the same time, the Chips Act addresses the threat of a Chinese blockade of Taiwanese capacities, or even an attack on them, leading to “fab nearshoring” exercise.

Consolidation of global chip manufacturing capacities in the US and other Western allies, dubbed the Fab-4 (US, Japan, Taiwan, and South Korea apart from Europe), is currently on. Investments close to $200 billion have either already been grounded or are on the drawing boards. At least 40 new Fab facilities are said to be on the anvil across 16 US states.

QUAD is looking for a contingency plan in event of Chinese attack on Taiwan

Taiwan produces 90% of advanced semiconductor chips used in critical industries and electronic devices globally. TSMC, its flagship semiconductor manufacturer, fabricates 92% of advanced chips for American firms. AChinese takeover of Taiwan will wipe out $1 trillion every year from the global economy over the next few years and see China railroading the global economy.

QUAD nations are indeed pushing semiconductor manufacturing in India to prevent any adverse impact on their economies and global supply chains in event of Chinese aggression towards Taiwan. It is indeed a win win situation for India, and it must capitalize it at any cost.

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