Foreign Firms Eye India for Semiconductor Manufacturing Tie-Ups

An increasing number of foreign firms under financial strain are looking at collaborations with Indian companies to set up semiconductor fabrication units, inspired by lucrative state incentives, a huge local market, and a talented pool of personnel. Electronics giant Sharp and US chipmaker Onsemi are two such companies that are mulling tie-ups, although both have not made any definite announcements.

Industry experts maintain that Chinese competitors' aggressive push is compelling Korean and Japanese companies to explore new markets. "Chinese firms are grabbing spaces which were once dominated by Korean and Japanese companies," a source informed ET. "India is a growing market for them. The potential of the Indian market which people have been eyeing for two-three decades is now getting a reality more and more."

Key Highlights:

• Foreign firms like Sharp and Onsemi explore partnerships with Indian companies for semiconductor fabs
• India Semiconductor Mission offers financial incentives for silicon, display, and compound chip production
• Experts highlight the need for skilled talent and warn of global competition from Southeast Asia and the Middle East

The India Semiconductor Mission offers significant financial support for silicon fabs, display fabs, compound semiconductors, sensors, packaging, and chip design. Specialists express that this framework is attractive to firms struggling with high expenses and poor demand elsewhere.

Also Read: Bridging The Service-Product Gap In Indian Semiconductor Industry

"Merging foreign technology with Indian funding can be profitable for incumbents, A few joint ventures have already been cleared by the government, focusing on chips for consumer electronics, automotive and industrial use." said Danish Faruqui, Fab Economics CEO.

But there are challenges ahead. Faruqui stressed that in addition to capital and technology licenses, "skilled talent and skill sets across a range of functions" are required for high-value chip manufacturing. Experts also caution that Southeast Asia and the Middle East are competing to develop semiconductor ecosystems, and thus it is imperative for India to get its foundations in order soon to be able to support growth.