Major Indian Company To Start Producing Semiconductors As Global Shortages, Threats From China Continue

Indian multinational conglomerate Tata Group plans to start production of semiconductors in the country within the next few years.

Multiple manufacturing economies in East Asia enforced harsh lockdown measures two years ago, creating disruptions in the worldwide semiconductor supply chain that continue to the present day. Tata Sons Chairman Natarajan Chandrasekaran revealed during an interview with Nikkei Asia that the company would invest $90 billion in various projects over the next five years, from electric vehicles to renewable energy, as the Indian economy develops.

“We have created Tata Electronics, under which we are going to set up semiconductor assembly testing business,” Chandrasekaran told the outlet, adding that the company would “have discussions with multiple players,” a reference to partnering with existing chip manufacturers.

The company could eventually create an “upstream chip fabrication platform,” according to the executive. Launching a fabrication facility, often called a “fab” within the industry, presents more technical and financial obstacles than establishing plants devoted to assembly and testing.


China, South Korea, and Japan maintain nearly 80% of global semiconductor manufacturing capacity, according to data from the Brookings Institution, with Taiwanese companies such as TSMC producing more than 90% of cutting-edge chips smaller than 10 nanometers, the type of chips used in cell phones and computers. China, a geopolitical rival of India, has recently floated invading Taiwan, prompting some economies to hedge against disrupted supplies from TSMC.

India presently has no semiconductor industry apart from software design. Demand for consumer electronics, however, has been quickly growing within the developing nation, which is slated to overtake Japan and Germany as the world’s third-largest economy within the next decade, according to a report from S&P Global.

India presently maintains a trade surplus with the United States and a trade deficit with China, the latter of which is seen as a vulnerability among Indian officials. The dynamic “encourages policymakers to seek alternatives, particularly in pharmaceuticals, automobiles, and electronics, where the aim is to make India a major exporter itself,” the report said.

India boasted a real gross domestic product of $3.2 trillion as of last year, according to data from the World Bank, while the United States and China are the world’s first and second largest economies, with real output of $23 trillion and $17.7 trillion, respectively. The nascent South Asian power is slated to eclipse China as the world’s most populous country as soon as next year. The former nation currently maintains a fertility rate of 2.2 children per woman, while the latter has a fertility rate of 1.7 children per woman, according to data from the Organization for Economic Cooperation and Development.

Geopolitical and supply chain tensions have caused lawmakers in the United States and Europe to enact more robust semiconductor manufacturing incentives. The CHIPS and Science Act, signed by President Joe Biden earlier this year, created $39 billion in manufacturing incentives for semiconductors, $13.2 billion for research and development and a 25% investment tax credit for computer chip production.

TSMC announced plans to more than triple its $12 billion investment into a new fabrication complex in Arizona, marking the largest foreign direct investment in the state’s history. “We are thankful for the continual collaboration that has brought us here and are pleased to work with our partners in the United States to serve as a base for semiconductor innovation,” TSMC Chairman Mark Liu said in a press release.

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