Semiconductor is the new oil: opportunities and challenges faced by India in the Chip Wars

Semiconductors have emerged as the lifeblood of the modern world, likened to oil, driving global innovation. As the world becomes increasingly reliant on these tiny yet powerful components, a new battleground has emerged known as the ‘Chip Wars.’ Within this competitive landscape, India finds itself at a crucial crossroads, facing both opportunities and challenges as it navigates the complexities of the semiconductor industry. Industry insiders and experts discussed India’s position in these ‘Chip Wars.’

David Reed, CEO of Vedanta Foxconn, noted that one of the biggest challenges that India faces is lack of credible experienced talent when it comes to semiconductor manufacturing facilities.

“When you're spending 8 billion, 10 billion, 20 billion, and some of these wafer fabs are hitting 30, 32 billion in the world, you want to staff it with experienced people. And the dilemma with India is you have the world's brightest people, the youngest people, but there's no experience on actually working in a wafer fab or a foundry,” said Reed.

Adding to the list of challenges, Satya Gupta, President- VLSI Society of India, said that India also needs to be on the global table where the semiconductor policies of the world are discussed.

“India needs a seat on the table where semiconductor geopolitics are discussed across the world, right. We need that well deserved seat because we are going to be the largest consumer of semiconductors,” Gupta explained.

Gupta also added that although India is a huge consumer of products made using semiconductor chips, the country lacks manufacturing capabilities.

He said, “There has to be much emphasis on the manufacturing side too, right. We are large consumer of the chips, but the demand for the chips is not there that much in India. Only 10 per cent of that thing which we consume we can call as a demand.”

Neil Shah, of Counterpoint Research explained that despite the challenges, India also has a huge opportunity when it comes to semiconductors. But he also added that supply chain issues need to be resolved before India can take the big leap.

“India is becoming more of a hub because also from a policy perspective, the government is laying a red carpet for everyone to come and manufacture here. So if you are setting up a manufacturing unit of finished goods over here, you need to have a very robust supply chain. You cannot wait for chips to arrive, because if you don't even have one chip, you cannot manufacture that phone,” Shah added.