Using a bargaining chip to solve India’s recent geo-economic crisis

The war between the empire and the kingdom addressed both important and trivial issues. Conventional wars are mostly fought on disputed territories and occasionally on stolen spouses. West Asia is scarred by oil conflicts and disputed borders. Although these post-World War II structures have been on the fringe, systems based on global rules increasingly force countries to engage in unconventional warfare. A new unconventional geo-economic war has been sullen. Like everything else in this interconnected world, India is bound to be involved and forced to choose a position, but the conflict has undermined its critical and strategic importance. Economic strength. In the context of prolonged conflict, lack of preparation may severely hurt India.
Semiconductor chips are becoming smaller and more complex every year, triggering hostilities between superpowers. These silicon chips are an indispensable part of today’s world, which can promote work, entertainment, communications, national defense, medical development, and so on. Unfortunately, semiconductors have become a proxy battlefield for technology-driven conflicts between China and the United States, with every superpower trying to seize strategic dominance. Like many other unfortunate countries, India seems to be under the headlights.
India’s chaotic state can best be illustrated by a new cliché. Like all previous crises, the new cliché has been monetized in the ongoing conflict: semiconductors are the new oil. This metaphor brought an uncomfortable voice to India. Just like the failure to repair the country’s strategic oil reserves for decades, the Indian government has also failed to establish a viable semiconductor manufacturing platform for India or secure a strategic chipset supply chain. Given that the country relies on information technology (IT) and related services to gain geo-economic impact, this is surprising. In the past two decades, India has been discussing the infrastructure of the fab, but no progress has been made.
The Ministry of Electronics and Industry has once again invited the intention to express its intention to “establish/expand existing semiconductor wafer/device manufacturing (fab) facilities in India or acquire semiconductor factories outside India” to resume this process. Another viable option is to acquire existing foundries (many of which were closed globally last year, with three in China alone) and then transfer the platform to India; even then, it will take at least two to three years to complete. The sealed troops can be pushed back.
At the same time, the dual impact of geopolitics and the supply chain disruption caused by the pandemic has hurt various industries in India. For example, due to damage to the chip supply pipeline, the delivery queue of the car company has been extended. Most modern cars depend to a large extent on the various core functions of chips and electronic devices. The same applies to any other products with a chipset as the core. Although older chips can manage certain functions, for critical applications such as artificial intelligence (AI), 5G networks or strategic defense platforms, new functions below 10 nanometers (nm) will be required. At present, there are only three manufacturers in the world that can produce 10nm and below: Taiwan Semiconductor Manufacturing Company (TSMC), South Korea’s Samsung and American Intel. As process complexity increases exponentially and the strategic importance of complex chips (5nm and 3nm) increases, only these three companies can deliver products. The United States tries to contain China’s technological progress through sanctions and trade barriers. Coupled with the abandonment of Chinese equipment and chips by friendly and friendly countries, this shrinking pipeline is further squeezed.
In the past, two factors hindered investment in Indian fabs. First, building a competitive wafer fab requires a large amount of capital investment. For example, Taiwan Semiconductor Manufacturing Company (TSMC) has pledged to invest US$2-2.5 billion to produce chips below 10 nanometers in a new factory in Arizona, USA. These chips require a special lithography machine that costs more than $150 million. Accumulating such a large amount of cash is based on the customer and the demand for finished products. India’s second problem is the insufficient and unpredictable supply of infrastructure such as electricity, water and logistics.
There is a third hidden factor hidden in the background: the unpredictability of government actions. Like all previous governments, the current government has also shown impulsiveness and tyranny. Investors need long-term certainty in the policy framework. But this does not mean that the government is useless. Both China and the United States are of strategic importance to semiconductors. TSMC’s decision to invest in Arizona was driven by the U.S. government in addition to the well-known Chinese government’s intervention in the country’s IT sector. Veteran Democrat Chuck Schumer (Chuck Schumer) is currently in the U.S. Senate for bipartisan cooperation to provide state subsidies to companies that invest in fabs, 5G networks, artificial intelligence and quantum computing.
Finally, the debate may be manufacturing or outsourcing. But, more importantly, the Indian government needs to intervene and take bipartisan actions, even if it is self-interested, to ensure the existence of the strategic bargaining chip supply chain, regardless of its form. This should be its non-negotiable key result area.
Rajrishi Singhal is a policy consultant, journalist and writer. His Twitter handle is @rajrishisinghal.
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Post time: Mar-29-2021