India and Thailand are vying for investments in semiconductor manufacturing, as the global chip industry faces challenges due to the ongoing chip war between China and the United States. Both countries are strategically positioning themselves as alternative options, aiming to become major players in the semiconductor supply chain. Prime Minister Narendra Modi highlighted India’s strengths and potential as a trusted partner in the global chip industry during the SemiconIndia 2023 industry event. With the Indian government’s approval of the Modified Programme for Development of Semiconductors and Display Manufacturing, and its collaboration with companies like Micron Technology, India is making significant efforts to establish itself as a chipmaker industry. Meanwhile, Thailand is focusing on drawing companies engaged in front-end processes, offering attractive tax breaks and developing a local electric vehicle (EV) industry to leverage the increasing demand for semiconductor devices in EVs.
India’s goal of becoming a prominent player in the semiconductor industry is evident through its initiatives and partnerships. The Indian government, with an investment outlay of Rs. 76,000 crores, has approved the Modified Programme for Development of Semiconductors and Display Manufacturing. This program provides attractive incentives for companies engaged in various semiconductor-related activities. Additionally, Micron Technology’s proposal to set up a semiconductor unit in India with a capital investment of Rs. 22,516 crore has been approved. These efforts highlight the government’s commitment to making India the next chipmaker hub.
American companies, such as Micron Technology and Foxconn, are also setting up manufacturing facilities in India. Foxconn, in collaboration with Applied Materials, intends to produce chipmaking machinery in the state of Karnataka. This presence of American players indicates a shift in the industry, signaling that India is gaining recognition as a potential semiconductor manufacturing destination.
Despite India’s progress in attracting semiconductor investments, concerns about infrastructure, particularly electricity, persist. Infrastructure issues have led to Foxconn scrapping a previous semiconductor tie-up in India. However, the executive vice president of Japanese chipmaking equipment maker Disco, Noboru Yoshinaga, suggests that the tide has changed, considering the entry of American players. To ensure long-term success, the Indian government aims to achieve initial successes and learn from them for subsequent projects.
India is strengthening its partnership with Japan, known for its expertise in front-end processes and chipmaking equipment. The governments of India and Japan signed a memorandum of understanding in July to promote semiconductor supply chain cooperation. This collaboration is expected to enhance India’s semiconductor industry further, leveraging Japan’s strengths in chip manufacturing.
Thailand, like India, is actively seeking semiconductor investments and focusing on front-end processes. The Thai government has expanded corporate tax breaks for chip companies entering the country, incentivizing them to establish their operations in Thailand. These tax breaks have been extended from eight to thirteen years for companies in the supply chain’s upstream, such as semiconductor designers and wafer etching firms. The focus on front-end processes reflects Thailand’s ambition to attract technically advanced companies in the semiconductor manufacturing sector.
Thailand is also capitalizing on the increasing demand for semiconductors in the electric vehicle (EV) industry. By developing a local EV sector that encompasses assembly plants and suppliers, Thailand aims to gain an advantage in attracting semiconductor manufacturing capacity. EVs typically require more semiconductor devices than traditional gasoline-engine cars, making the development of a local EV industry strategically beneficial for Thailand.
India and Thailand are among several countries that have recognized the evolving dynamics of the global chip industry and the shifting preferences of chip companies. Thailand is seen as a neutral country, providing refuge from the tensions between China and the United States. India, on the other hand, offers the advantage of being the world’s largest democracy, which Prime Minister Narendra Modi emphasized during the SemiconIndia 2023 industry event. Both countries are actively pursuing semiconductor investments to position themselves as significant players in Asia’s chipmaking landscape.
India and Thailand’s race for semiconductor investments reflects their ambition to establish themselves as major players in the global chip industry. Through initiatives, partnerships, and tax incentives, both countries are attracting companies engaged in semiconductor manufacturing. India’s collaboration with American players and its partnership with Japan, along with Thailand’s focus on front-end processes and the development of a local EV industry, enhance their competitiveness in this race. As the global chip industry undergoes shifts and uncertainties, India and Thailand are positioning themselves strategically to take advantage of opportunities and emerge as key semiconductor manufacturing hubs in Asia.
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