Indian semiconductor industry may benefit from the proposed US CHIPS Act

Industry Outlook Team | Friday, 09 September 2022

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A US legislation promoting domestic production of semiconductors may be beneficial India and others over the years, said. The CHIPS Act aims provides incentives to companies for setting up semiconductor and advanced technology factories in the US. It also prohibits companies receiving funding from the US government from setting up such factories in China for the next 10 years, Mint newspaper reported. "The $50 billion plus incentives from the US may be utilized by then, and firms will look to expand globally, and India would be a good choice. By then, markets

like India, too, will have evolved to a stage where these global firms will see benefit in setting up advanced semiconductor manufacturing here," Satya Gupta, chief executive and founder of Electronic Products Innovation Consortium (EPIC) Foundation, told Mint. The act has a total outlay of $53 billion, five times India's production linked incentive scheme (PLI) scheme for semiconductors which amounts to $10 billion. Samsung, Intel, SK Hynix, Micron, Qualcomm, Broadcom, MediaTek, Texas Instruments, Nvidia and AMD are the top ten companies that led semiconductor production in 2021, Mint states. Out of these, seven are American firms.

India does not have an ecosystem in place for advanced semiconductor manufacturing. However, companies like the Tata group and Vedanta have expressed interest in setting up chip facilities. The government has also received interest from some global firms.

"India has already introduced a production-linked incentive (PLI) scheme to attract global clients. Alongside this, it’s not like India has no existing ecosystem of the semiconductor industry—the semiconductor laboratory (SCL) in Mohali, Punjab, manufactures semiconductor chips in partnership with local and Israeli suppliers," Vivek Tyagi, chairman of industry body Indian Electronics and Semiconductor Association said.