India is being touted as an alternative to investing in chips amid regional risks

PENANG, Malaysia – Tata on Wednesday presented its position on India as an alternative destination for semiconductor manufacturers concerned about the potential risk of geopolitical and natural disasters in other parts of Asia.

Raja Manikkam, CEO of Tata Technologies, Tata Electronics’ OSAT semiconductor assembly and testing division (OSAT), advertises India, along with Southeast Asia, as a destination for chipmakers, citing its attractive location with easy access to land and sea transport. OSAT providers provide third-party integrated circuit packaging and testing services.

“It’s always location, location and location,” Rajasaid at a semiconductor conference organized by the SEMI Industrial Association in Penang, an island nation in Malaysia. He said that currently the production of semiconductors is carried out mainly in parts of Asia prone to “geopolitical” concerns and “natural disasters”.

Although Raja did not give details, Taiwan and South Korea, leading players in the chip industry in the region, are facing concerns about tensions with China and North Korea, respectively. China, which is strengthening its semiconductor industry, is presenting business uncertainty amid economic and security concerns, with the United States Japan, another major player, and Taiwan suffering from frequent earthquakes.

Raja, a Singaporean, commented when the Indian government earlier announced a $ 10 billion stimulus program to develop the country’s semiconductor ecosystem.

“The government has done its part and the states concerned are also competing with their own stimulus packages,” Raja said.said. “India’s private sector needs to be strengthened.”

Raja also said that while India needs the global semiconductor industry to invest there, the sector will also need the country with 1.3 billion people to reach the desired market size of $ 1 trillion.

“Very large semiconductors [companies] they have research and development based in India, so it makes perfect sense for research centers to be surrounded by manufacturing companies, ”he said.

India has a large workforce with “deep and scalable engineering talent,” he said, adding that the large population of young people also “offers a huge market for end users.”

Speaking at the same conference, Loi Hwi Chuan, executive director of telecommunications, media and technology at Singapore’s DBS Bank, agreed that India could be a preferred destination for new semiconductor investments as companies take advantage of the China Plus One strategy. .

“[The] The total semiconductor market in India is expected to grow by [an] 18.8% combined annual growth rate, reaching $ 64 billion in 2026, “he said. “We will be able to see more investment in India and Southeast Asia as manufacturers adopt the China Plus One strategy,” he added.

“China Plus One” refers to the movement between producers to build production capacity in other countries, such as hedging against vulnerability to a number of political, business and trade uncertainties.

The country has set itself the goal of becoming 70% self-sufficient in semiconductor manufacturing within a decade amid US action to cut off the country from key semiconductor supplies. The Chinese government is also seeking to strengthen its semiconductor industry through huge investments and incentives such as tax breaks.

Raja, who joined Tata Electronics in 2021, founded Tessolve Semiconductors in 2003 before selling it to Hero Electronix in 2016. His appointment was part of a large stake in the Tata Group’s steel salt conglomerate. its endeavor in the semiconductor industry.

“When Tata does something, it’s usually huge, and Tata Sons chairman Chandra (Natarajan Chandrasekaran) has already signaled that semiconductors will be one of his key priorities,” Raja said.

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