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Mao Keji: India's Pursuit of Chip Leapfrogging is a Big Gamble

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Update time : 2022-11-16 13:45:05
        Recently, India's Modi government has not only vigorously supported labor-intensive processing industries to build "Made in India", but also made great efforts to develop capital-intensive and technology-intensive industries at the top of the value chain, such as chips and screens. Faced with the current situation of India's weak local industrial base, the Modi government still wants to pursue the "leapfrog development" of the chip industry, whether this ambition can be landed?
        In order to develop the chip industry, the Modi government has made painful efforts. 2021 December, Modi launched a total of 10 billion U.S. dollars of financial special plans to attract domestic and foreign investors to set up wafer manufacturing plants in India, and encourage the flow of funds into the relevant sectors. At the same time, in charge of the chip industry, the Indian Ministry of Telecommunications also launched the "India Semiconductor Program". Modi "tens of billions of subsidies" most through the "production-related incentive program" and "design-related incentive program" to distribute. According to the latest rules, the Indian government plans to subsidize not only half of the capital expenditure of all specifications wafer manufacturing projects, but also the implementation of the same proportion of subsidies for assembly, testing, marking, packaging and design.

        In addition to the federal government, India's local governments also jumped on the bandwagon. With a tradition of doing business in West India and South India government commitment to clean water, electricity, logistics to ensure supply, but also competing to introduce tax breaks, production subsidies and other active concessions. For example, Tamil Nadu, which has attracted Tata and Foxconn, intends to continue to use scarce land as an incentive to attract foreign investment. At the same time, to prevent disorderly competition, the central government also coordinates production capacity around the country, trying to promote the ecological integrity of the industry within India's clusters, rather than fragmented industrial blocks that are separate and offset each other. 
        At present, a number of chip companies have responded to India's official call, lined up to divide the "tens of billions of subsidies". For example, Singapore IGSS has signed a memorandum of understanding with Tamil Nadu, plans to build a wafer fab within three years. Israel, the United Arab Emirates joint venture ISMC also expressed interest with the state of Karnataka, intends to spend 30 billion U.S. dollars in the Indian high-tech capital of Bangalore to build a semiconductor factory. The most noteworthy is the signing of a memorandum of understanding between Foxconn and Vedanta Group, a local Indian industry giant, to build a semiconductor plant on the west coast of India at a cost of about $20 billion. At the same time, the Modi government is also in frequent contact with TSMC and other leading companies in the industry to explore the possibility of cooperation.

 
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