Asia’s Silicon Ambition: How Taiwan and South Korea Are Shaping India’s Semiconductor Future
India’s semiconductor journey is entering a transformative phase, marked by a series of strategic collaborations with global technology leaders. Among the key players leading this change are Taiwan and South Korea, who are following Japan’s footsteps in establishing a stronghold in India’s semiconductor ecosystem. These countries are not merely investing financially—they are shaping the future of technology in India by forging local partnerships, adapting to regulations, and utilizing India’s vast pool of engineering talent. This blog delves into the deepening engagement of Taiwan and South Korea in India’s semiconductor landscape, the challenges they face, and the opportunities that lie ahead.
The Global Semiconductor Race and India’s Position
The semiconductor industry is often termed the “oil of the digital era.” Semiconductors power everything from smartphones and electric vehicles to data centers and defense systems. As the geopolitical landscape shifts and nations seek to secure their chip supply chains, India emerges as a promising destination. With an expected semiconductor market size of $271.9 billion by 2032, India offers immense potential for manufacturing, design, and innovation.
To tap this opportunity, India has launched a series of initiatives such as the India Semiconductor Mission (ISM), the Production-Linked Incentive (PLI) scheme, and favorable state-level policies like Gujarat’s Semiconductor Policy. These efforts aim to attract foreign investment, promote R&D, and create a skilled workforce. The result? A growing interest from East Asian tech giants, particularly Taiwan and South Korea.
Taiwan’s Strategic Leap into India
Taiwan, home to global semiconductor powerhouses like TSMC and UMC, is recognized as the epicenter of chip manufacturing. However, rising geopolitical tensions with China have pushed Taiwanese companies to diversify their manufacturing bases. India, with its growing demand for electronics and supportive policies, has become an attractive destination.
Key Investments and Collaborations
Powerchip Semiconductor and Tata Group: One of the most high-profile collaborations is between Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC) and India’s Tata Group. The two are setting up a semiconductor fabrication plant in Gujarat, which will play a crucial role in India’s chip manufacturing journey.
Increased FDI: According to James Huang, chairman of the Taiwan External Trade Development Council (TAITRA), Taiwanese investment in India surged to $665 million between 2018 and 2023, up from just $277 million between 2006 and 2017. This growth reflects a strategic commitment to India as a long-term manufacturing and innovation partner.
Academic and Talent Collaboration: The All India Council for Technical Education (AICTE) has launched multiple initiatives in collaboration with Taiwanese institutions to bridge the semiconductor talent gap. This includes student exchange programs, skill development training, and joint research ventures.
Challenges Ahead
While enthusiasm is high, Taiwanese firms have raised red flags on several infrastructural and regulatory bottlenecks:
Infrastructure Gaps: Consistent water and electricity supply, critical for chip fabs, remain a concern.
High Import Tariffs: Tariffs on semiconductor equipment are seen as a deterrent to establishing high-end fabs.
Regulatory Complexity: Licensing and land acquisition processes need to be streamlined to facilitate smoother operations.
Despite these challenges, Taiwan is optimistic about its future in India, largely due to the proactive steps being taken by both central and state governments.
South Korea’s Expanding Semiconductor Footprint in India
South Korea, home to tech behemoths like Samsung and SK Hynix, is a global leader in memory chips and integrated circuits. Recognizing the need to reduce dependency on China and diversify its operations, South Korea has started looking at India not only as a market but also as a manufacturing partner.
Massive Financial Commitments
In May 2024, the South Korean government announced a $19 billion support package for its semiconductor industry. While primarily aimed at strengthening its domestic industry, this move is also designed to bolster global competitiveness through strategic international collaborations.
Interest in Gujarat and Beyond
South Korean firms have shown keen interest in Gujarat’s semiconductor ecosystem. According to Gujarat officials, several Korean companies are exploring opportunities in:
Research and development for chip design.
Assembly Testing Marking and Packaging (ATMP) units.
Manufacturing of semiconductor-grade components and materials.
These developments point toward a broader intent: to co-develop a comprehensive semiconductor supply chain in India that benefits both nations.
Collaboration Opportunities
Samsung’s Dual Role: Samsung is already a significant player in India’s electronics market and is now rumored to be exploring semiconductor manufacturing opportunities in partnership with Indian firms.
Talent and Training Programs: South Korean universities and companies are in talks with Indian counterparts to set up training centers and joint research labs.
Japan: The Trailblazer
Taiwan and South Korea’s actions follow a path already paved by Japan, which signed a Memorandum of Cooperation (MoC) with India in 2023. This MoC focuses on strengthening the semiconductor supply chain, enhancing R&D, and facilitating technology transfers.
Japan’s role is pivotal as it brings in advanced semiconductor equipment and materials technologies—an area where India currently lacks expertise. With companies like Renesas and Tokyo Electron involved, Japan is setting a template for successful engagement that Taiwan and South Korea are now emulating.
India’s Policy Backbone: Enabling the Chip Dream
To support this foreign interest, India has built a strong policy and institutional framework:
India Semiconductor Mission (ISM): Offers financial incentives and project facilitation support for fabs, ATMP units, and design firms.
PLI Scheme: Provides 50% financial support for setting up fabs.
Skilling Initiatives: Programs like ‘Chips to Startup’ aim to train 85,000 engineers in semiconductor design and manufacturing.
These initiatives are being complemented by state-specific semiconductor policies that offer land, water, power, and capital subsidies. Gujarat and Tamil Nadu are leading the charge.
Bridging the Talent Gap
One of the primary challenges raised by foreign players is the lack of semiconductor-specific skills in India. While the country boasts a vast pool of engineering graduates, semiconductor manufacturing requires highly specialized knowledge.
Solutions in Motion
Collaborations with Universities: Institutions like IIT Madras, IISc Bangalore, and IIT Bombay are partnering with global firms to design chip-focused curriculums.
International Training: Countries like Taiwan are inviting Indian students and professionals for hands-on training at semiconductor fabs.
Corporate-Academic Alliances: Companies such as Applied Materials and Lam Research are working closely with Indian academia to develop training modules.
Future Outlook: Towards a Multi-National Semiconductor Ecosystem
India is uniquely positioned to become a global semiconductor hub, thanks to:
A massive domestic market.
Competitive labor costs.
A supportive policy ecosystem.
If current trends continue, India will not only reduce its dependency on imported chips but also become a manufacturing and innovation hub for the world.
What Needs to Be Done:
Accelerate Infrastructure Development: Water, power, logistics, and waste management must meet the high standards required for semiconductor fabs.
Simplify Regulations: A one-window clearance system can help reduce red tape.
Boost R&D Funding: Indigenous research must be encouraged through both public and private investments.
Conclusion
Taiwan and South Korea’s deepening engagement in India’s semiconductor space signifies a tectonic shift in global supply chain dynamics. By collaborating with Indian companies, investing in infrastructure, and nurturing local talent, these nations are not only securing their strategic interests but also accelerating India’s vision of becoming a semiconductor powerhouse.
India now stands at the threshold of a new era—one where silicon, not oil, will power its growth. With Japan, Taiwan, and South Korea as partners, the country’s chip dreams are not only viable but increasingly within reach.