India, US semiconductor industry bodies sign MoUs to bring chip firms into country

The India Electronics and Semiconductor Association (IESA) has signed a memorandum of understanding (MoU) with the Semiconductor Industry Association (SIA), which represents the chip industry in the US to identify potential areas of collaboration between the two countries. 

SIA’s member companies include large American chip designers and manufacturers, such as Intel, AMD, NVIDIA, Texas Instruments, Qualcomm, Global Foundries, and Broadcom.

In an interview with Mint, Rajeev Khushu, chairman of IESA, said that the MoU will help in strengthening the country’s semiconductor ecosystem. He said that this is the first visit that the SIA has made to India, and the two industry’s bodies will look to “leverage each other’s strengths”.

 “If you see IESA’s strength, it is to connect with the local government, the state governments and we also cater to customers who use semiconductors here. On the other hand, the SIA has global reach. Our companies include startups and fabless companies, and they will look to leverage SIA’s global reach to move outside India and sell their products and services,” he said.

Further, Khushu said 20% of the global workforce in semiconductor design comes from India, which is the country’s “biggest strength”. “There are still many semiconductor companies that aren’t present in India. The idea is that the SIA tells them what is happening here, what the government is trying to do, and what state governments are planning to do,” he added, saying that the idea is to get more foreign direct investment (FDI) into the country.

The two industry bodies also released two reports, titled the India Semiconductor Industry Report and the Semiconductor Manufacturing Supply Chain report, which provide insights into the manufacturing supply chain in the country.

John Neuffer, president and chief executive officer of SIA, said that the MoU will help the SIA “establish and build relationships” with key stakeholders in the country and gain better market understanding.

Global Chip suppliers have been stressed over the past two years, due to the growing demand for chips in electronics, automotive, IT, and healthcare sectors and the pandemic-led disruption in the supply of material and production.

The ongoing war in Ukraine is expected to constrain the supply even further as both Russia and Ukraine are leading suppliers of neon gas and palladium that are used for semiconductor manufacturing in several countries. 

Several chip companies have announced the setting up of new foundries to overcome the chip shortage. For instance, in January Intel said it will invest up to $100 billion to set up the world's largest chip-making facility in Ohio, US. An initial investment worth $20 billion has already been made in the 1,000-acre site in the US state. 

In India, the union government announced a ₹76,000 crore incentive scheme, in December 2021, to encourage semiconductor design and manufacturing in the country. Some Indian companies including Vedanta Group also announced entry into semiconductor manufacturing with phased investment plans of $15 billion.