US unlikely to provide real assistance for India’s chip ambition
Published: Oct 13, 2022 11:35 PM
Illustration: Tang Tengfei/Global Times

Illustration: Tang Tengfei/Global Times

US deputy assistant secretary in the bureau of South and Central Asian affairs Afreen Akhter is leading a semiconductors industry trade mission to India, local media outlet the Economic Times reported on Thursday. The US and India will join hands to address semiconductors supply chain challenges, and the US will help India boost its semiconductor manufacturing capacity, the US diplomat said.

When asked about the role of Quad, which is widely seen as a geopolitical tool to contain and besiege China and maintain US hegemony, in promoting semiconductor industry, Akhter said US-India semiconductor partnership could contribute to a potential Quad initiative, according to the report.

The US' offer to provide assistance to India to build up its semiconductor manufacturing capacity may seem generous, but it appears to be just more lip service designed to lure India into a geopolitical game to exclude China from the global chip industrial chain, rather than a commitment with real investment plans to support India's chip manufacturing.

As the world's fifth-largest economy, India certainly wants to become a chip powerhouse, build a competitive advantage in one of the most important sectors in the world, and forge semiconductor alliance with other countries. However, India should not take the bait laid by American diplomats in the hope that the US will provide it with important resources.

First, the assistance that Akhter said the US would provide to India may not be delivered on. The so-called CHIPS and Science Act introduced by the US in August obviously intends to bring the chip manufacturing back to the US and shape the global chip industrial chain with the US as the core. The US' priority is to build up industrial chain focused on the interests of the US, which is unlikely to bring benefits to India.

In recent years, US chip manufacturing has declined sharply, and its domestically manufactured chips account for only 12 percent of the world's total. To reverse this trend, the US CHIPS bill provides $52.7 billion in subsidies to attract chip manufacturers to build factories and carry out research in the US. Even as the US chose India as a partner in semiconductor cooperation in geopolitical calculations, this doesn't mean it will really help India to boost semiconductor sector.

In order to establish its own advantages in semiconductor manufacturing, India has also actively introduced a series of preferential policies to attract chip companies to invest in production in India. At the end of last year, the Indian government announced a $10 billion incentive plan to provide support of up to 50 percent of the project cost to attract chip makers to set up bases in India. 

Promoting the development of the semiconductor industry is India's national strategic plan, and it is an essential part of its ambition to revitalize the manufacturing industry. But now the reality is that India does not yet have an industrial giant in the sector. The real question India faces is if it wants to upgrade its chip manufacturing sector and move toward the upstream industrial chain, and it must build up a solid industry basis, instead of pinning its hope on US lip service.

The chip industry chain requires close cooperation between upstream and downstream industry participants. It is undeniable that India's chip manufacturing is developing rapidly, and has advantages in terms of market and some links of the industrial chain, but its development cannot leave the Asian industrial chain. If India wants to boost its chip industry, it should strengthen cooperation with regional industrial chain, especially with manufacturing hub China.

The author is a reporter with the Global Times.