The US offer to help India in chip manufacturing is just lip service: China

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New Delhi, Oct 15

As the US and India join hands to address semiconductors supply chain challenges, the Joe Biden government's offer to provide assistance to India to build up its semiconductor manufacturing capacity appears to be just lip service, Chinese state-run publication Global Times has said.

US deputy assistant secretary, South and Central Asia, Afreen Akhter, during her visit to India this week, said they will help India boost its semiconductor manufacturing capacity.

Akhter led a semiconductors trade mission to India and met top government officials in the Capital.

According to Global Times, the announcement is designed to "lure India into a geopolitical game to exclude China from the global chip industrial chain, rather than a commitment with real investment plans to support India's chip manufacturing."

The report mentioned that the CHIPS and Science Act, which aims to provide $52 billion in subsidies for chip manufacturers to build fabrication plants in the US, is an attempt to build up an industrial chain focused on the interests of the US, "which is unlikely to bring benefits to India."

India has introduced a series of preferential policies to attract chip companies to invest in production in the country. Last year, the government announced a Rs 76,000 crore performance-linked incentive (PLI) scheme in the semiconductor sector to boost local manufacturing.

As India and the US double down on domestic semiconductor manufacturing, China witnessed its biggest-ever monthly decline in chip manufacturing in August owing to Covid restrictions and weakening demand.

That was also the second consecutive month of decline for chip manufacturing. In July, the output nosedived 16.6 per cent to 27.2 billion units.

Meanwhile, the Gujarat government has partnered with Vedanta and Foxconn, aiming for an investment of Rs 1.54 lakh crore to achieve self-reliance in the field of semiconductor manufacturing.

India's semiconductor component market is likely to reach $300 billion in cumulative revenues by 2026, as 'Make in India' and production-linked incentive (PLI) schemes will boost local sourcing of semi-components in the coming years, according to the report by the India Electronics & Semiconductor Association (IESA) and Counterpoint Research.

The report further said that as India wants to become a chip powerhouse, it "should not take the bait laid by American diplomats in the hope that the US will provide it with important resources."

"First, the assistance that Akhter said the US would provide to India may not be delivered on," it added.

"Even as the US chose India as a partner in semiconductor cooperation in geopolitical calculations, this doesn't mean it will really help India to boost the semiconductor sector," the report mentioned.

The real question India faces is if it wants to upgrade its chip manufacturing sector and move toward the upstream industrial chain, "it must build up a solid industry basis, instead of pinning its hope on US lip service".


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