India should explore partnership with Taiwan and Japan to enhance its Semiconductor ecosystem: Report

New Delhi [India], September 14 : India should deepen its partnerships with countries like Taiwan and Japan to strengthen its presence in the semiconductor ecosystem, says a report by research firm Elara Securities.
Globally, Taiwan holds a dominant position in semiconductor manufacturing, with its companies accounting for 78 percent of the world's fab manufacturing and 53 percent of the assembly, testing, and packaging (ATMP) market.
Over 312 Taiwanese firms lead this sector, but their involvement in India's nascent semiconductor industry remains limited.
The report highlights that despite aggressive government efforts and incentives, Taiwan's largest semiconductor companies, including industry giant TSMC, have shown little interest in establishing fabs in India. The ongoing geopolitical tensions, particularly in the Taiwan Strait, have led Taiwanese semiconductor companies to diversify their operations abroad.
TSMC and other key players like UMC are investing in fabs in the U.S., Japan, and Germany, focusing on both advanced and legacy chip production. For instance, TSMC is building fabs in Arizona and Germany, where it collaborates with local suppliers to produce advanced chips. However, no such announcement or collaboration with Indian companies has been made so far.
The report states that Japan is providing training to Indian workers, while Taiwan is investing in semiconductor clusters in Southeast Asia. Strengthening such collaborations could provide the much-needed expertise and investment to bolster India's semiconductor ecosystem.
Nonetheless, the report noted that the collaboration between Tata Group and Powerchip Semiconductor Manufacturing Corporation (PSMC) is a positive step towards developing the semiconductor ecosystem in India. Recently, Tata announced a partnership with Taiwan's PSMC to build a 28-nanometer fab plant.
The report emphasises the need for India to improve its infrastructure and manufacturing ecosystem to attract significant investments in the sector. India also needs to select the right companies to improve manufacturing yields.
It underscores concerns about the talent pool, stating that while many Indian students receive semiconductor training in Taiwan, a majority prefer to stay abroad, limiting the country's ability to build a skilled domestic workforce.
India's infrastructure, intellectual property protection, and regulatory environment also need improvement to attract global semiconductor manufacturers and build a flourishing semiconductor ecosystem.
On the global front, India has an opportunity to capitalise on shifting trade dynamics. With the U.S. and EU increasingly wary of Chinese components in their supply chains, India could position itself as a non-China alternative.
Domestically, India's demand for semiconductor chips is expected to surpass USD 100 billion by 2030, driven by the growing demand for electronic goods, the report says.