Introduction:
India’s recent visit to Singapore has led to crucial agreements in sectors such as semiconductors, digital technologies, health, and skill development.
A significant outcome was the signing of a Memorandum of Understanding (MoU) for an India-Singapore Semiconductor Ecosystem Partnership, attended by the Indian Prime Minister and his Singaporean counterpart.
Body:
Strategic Importance of the Semiconductor Industry:
- Vital Role in Modern Technology: Semiconductor chips are integral to a wide range of products, from missiles and mobile phones to cars and computers. The agreement with Singapore holds significant geostrategic and economic importance.
- Supply Chain Disruptions and Geopolitical Shifts: The COVID-19 pandemic and geopolitical tensions, particularly China’s actions in the Taiwan Strait and South China Sea, have highlighted the need for India to develop a robust domestic semiconductor ecosystem.
- Global Semiconductor Dominance: The semiconductor industry is controlled by a few major players globally, with India entering this high-tech sector relatively late.
- Singapore’s Semiconductor Strength: Singapore contributes to about 10% of the world’s semiconductor production, holds 5% of global wafer fabrication capacity, and is responsible for 20% of semiconductor equipment manufacturing.
Challenges in the Semiconductor Partnership:
- Focus on Mature-Node Chips: Singapore’s semiconductor industry primarily focuses on producing “mature-node chips” (28 nm or more) used in appliances, automobiles, and industrial equipment. It lacks the capacity to manufacture advanced logic chips needed for fields like Artificial Intelligence.Rising Production Costs: As manufacturing costs increase, companies are relocating labor-intensive operations from Singapore. For example, Utac shifted some of its outdated operations to Thailand. Additionally, Singapore is not providing the kind of investment incentives seen in other nations to attract further semiconductor investments.
Conclusion:
India has already taken steps to develop its semiconductor industry through the India Semiconductor Mission launched in 2021, offering Rs 76,000 crore in subsidies, covering half the capital expenditure for chip manufacturing plants.
Recent government approvals include semiconductor projects worth Rs 1.26 lakh crore and a partnership between Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) to establish a semiconductor fabrication plant, marking a significant step towards India’s semiconductor self-reliance.