The December 16 report cited sources as saying that India is negotiating with Taiwan on the possibility of establishing a domestic semiconductor manufacturing center. According to reports, the two sides are still discussing agreements related to free trade and investment. Taiwan has the two largest semiconductor giants in the world-Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC).
It is learned from people familiar with the matter that New Delhi and Taipei are exploring the possibility of having either company set up a manufacturing plant in India.
People familiar with the matter said that the Indian side has also proposed some locations where production plants can be set up. However, they pointed out that this process is “complex”.
“This is a very complicated process because companies like TSMC use parts from hundreds of other companies. Setting up a center in India means persuading these companies to also set up factories in India to ensure the supply of parts,” the source says.
If the negotiations are ultimately successful, this will be only the second case in which a Taiwanese semiconductor manufacturer opens a manufacturing plant in another country. Previously, TSMC, with a market value of more than US$550 billion, announced a US$12 billion manufacturing plant in the United States.
Investment and free trade agreements
According to reports, India and Taiwan set up four groups earlier this year to discuss investment agreements and free trade agreements, in addition to establishing domestic semiconductor manufacturing centers and the training required for this purpose.
Taiwan is discussing investment and free trade agreements with many countries, and it is likely to be used to confront China diplomatically as tensions between the two neighboring countries increase.
It is learned from sources that a group established by India and Taiwan almost met earlier this year to discuss a free trade agreement. However, the report stated that the group that was discussing semiconductor manufacturing met twice during the same period.
The key to semiconductor manufacturing in India
For India, semiconductor manufacturing is crucial because the country’s demand for electronic chips is expected to grow rapidly in the next few years-essential for the production of a range of products from cars to smartphones. The Union Cabinet approved a production-related incentive plan on December 15 to spend 76,000 crore ($10.2 billion) in the development of semiconductor and display manufacturing ecosystems over the next six years.
In addition, the government will also provide incentives of Rs 2.3 lakh crores to promote the country’s electronics manufacturing industry. These announcements aim to make India an ideal manufacturing base for global electronics manufacturers, especially semiconductor manufacturers.
