Semiconductors are the foundational components of modern electronics, acting as the brains in devices that are integral to daily life. These tiny marvels have become central to global commerce and geopolitical strategy, powering everything from smartphones and data centers to advanced military hardware and renewable energy systems.
The global semiconductor market was valued at over $500 billion and is projected to double by 2030, highlighting its immense economic significance. Semiconductors enable critical advancements in communications, computing, healthcare, and transportation, and are essential for emerging technologies like artificial intelligence (AI), the Internet of Things (IoT), and 5G.
Geopolitical Tensions and Supply Chain Risks
The strategic importance of semiconductors has placed them at the center of intense geopolitical competition, primarily between the United States and China. The U.S. aims to preserve its technological dominance, while China is aggressively working to achieve self-sufficiency in chip production. This rivalry has led to U.S. sanctions aimed at limiting China's access to advanced manufacturing equipment, which has slowed but not stopped its progress.
A significant point of global vulnerability is Taiwan, which dominates the manufacturing of the world's most advanced semiconductors. Taiwan Semiconductor Manufacturing Company (TSMC) alone produces nearly 90% of the most sophisticated chips, which are essential for tech giants like Apple, Nvidia, and Samsung. Any military conflict or disruption in the Taiwan Strait could paralyze global supply chains, leading to severe shortages and economic instability.
India's Push into Semiconductor Manufacturing
Recognizing the strategic need for domestic capabilities, India has launched ambitious initiatives to build its own semiconductor ecosystem. The Indian government has approved several key projects aimed at establishing both fabrication and assembly facilities:
Tata-PSMC Fab: Tata Electronics, in partnership with Taiwan's Powerchip Semiconductor Manufacturing Corp (PSMC), is investing INR 910 billion (approximately $11 billion) to build a major semiconductor fabrication plant in Dholera, Gujarat. The facility will produce 50,000 wafers per month for applications in power management, high-performance computing, and automotive industries.
Tata Assembly Plant: Tata Electronics is also establishing a semiconductor assembly and testing facility in Assam with an investment of INR 400 billion.
HCL-Foxconn JV: A joint venture between HCL and Foxconn was approved to set up a facility in Uttar Pradesh to produce display driver chips for mobile phones, laptops, and other devices.
Renesas OSAT Facility: Japanese firm Renesas Electronics is partnering with India's Murugappa Group to establish an Outsourced Semiconductor Assembly and Test (OSAT) facility in Gujarat.
While these projects mark a significant step forward, India's initial focus is on mature-node chips rather than the cutting-edge technology produced by industry leaders. The country's existing strength lies in chip design and related services.
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