India touted as chip investment alternative amid regional risks

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PENANG, Malaysia — Tata on Wednesday made the case for India as an alternative destination for semiconductor makers worried about potential geopolitical and natural disaster risks in other parts of Asia.

Raja Manickam, CEO of Tata Technologies, the outsourced semiconductor assembly and test (OSAT) arm of Tata Electronics, touted India, alongside Southeast Asia, as a destination for chipmakers, citing its attractive location with easy access to land and sea transportation. OSAT vendors provide third-party IC packaging and testing services.

“It’s always location, location and location”, Rajasaid at a semiconductor conference organized by industry association SEMI in Penang, an island state in Malaysia. He said that today, the manufacturing of semiconductors is carried out largely in parts of Asia prone to “geopolitical” worries and “natural disasters”.

Although Raja did not elaborate, Taiwan and South Korea, the region’s major chip industry players, are concerned about tensions with China and North Korea, respectively. China, which is strengthening its semiconductor industry, presents trade uncertainties amid economic and security issues with the United States. Japan, another major player, as well as Taiwan experience frequent earthquakes.

The comments from Raja, a Singaporean, came as the Indian government previously announced a $10 billion incentive package to develop a semiconductor ecosystem in the country.

“The government has done its part and the respective states are also competing with their own incentive schemes,” Raja said.said. “It is on the part of the Indian private sector to intervene”.

Raja also said that while India needs the global semiconductor industry to invest there, the sector will also need the country of 1.3 billion people to reach the desired market size of $1 trillion. .

“A lot of large semiconductors [companies] have research and development based in India, so it makes sense that the research centers are surrounded by manufacturing plants,” he said.

India has a large workforce with “deep and evolving engineering talents”, he said, adding that the large youth population “also offers a huge end-user market”.

Speaking at the same conference session, Loy Hwee Chuan, Executive Director of Telecommunications, Media and Technology at Singapore’s DBS Bank, agrees that India could be a prime destination for new semi-investment. -drivers as companies take advantage of the “China plus one” strategy.

“[The] The overall semiconductor market in India is expected to grow at [an] 18.8% compound annual growth rate, reaching $64 billion in 2026,” he said. “We could see more investment in India and Southeast Asia as manufacturers adopt the ‘China plus one’ strategy,” he added.

“China plus one” refers to a move among manufacturers to establish production facilities in other countries as a hedge against vulnerability to a range of political, business and trade uncertainties.

The country has set a goal of becoming 70% self-sufficient in semiconductor production within a decade amid US moves to cut the country off from major semiconductor supplies. The Chinese government is also seeking to boost its semiconductor industry through huge investments and incentives such as tax breaks.

Raja, who joined Tata Electronics in 2021, founded Tessolve Semiconductors in 2003 before selling it to Hero Electronix in 2016. His appointment was part of a big salt-steel conglomerate gamble Tata Group has taken on its venture into the semiconductor industry.

“When Tata does something it’s usually huge and Tata Sons Chairman Chandra (Natarajan Chandrasekaran) has already signaled that semiconductors will be one of his top priorities,” Raja said.

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