India and Thailand Compete for Semiconductor Manufacturing Investment

India and Thailand are currently engaged in a fierce competition to attract semiconductor manufacturing investment and establish themselves as major players in the chipmaking industry in Asia. This comes at a time when China and the United States are embroiled in a chip war, creating an opportunity for these two countries to position themselves as alternatives in the global supply chain.

India has been actively promoting itself as a reliable and trustworthy partner for semiconductor investments. Prime Minister Narendra Modi highlighted the strengths and potential of the country during his address at the SemiconIndia 2023 industry event. He emphasized the advantages of partnering with the world’s largest democracy and expressed his confidence that India is becoming an excellent conductor for semiconductor investments.

To support its ambitions in the chipmaking industry, the Indian government approved the Modified Programme for Development of Semiconductors and Display Manufacturing in 2021. This program aims to provide attractive incentive support to companies engaged in various areas of semiconductor production, including silicon semiconductor fabs, display fabs, compound semiconductors/silicon photonics/sensors, semiconductor packaging, and semiconductor design. The approval of Micron Technology’s proposal for a semiconductor unit with significant capital investment further demonstrates India’s commitment to becoming a major chip manufacturer.

Despite these positive developments, India still faces persistent concerns about its infrastructure, particularly issues related to electricity. Foxconn’s decision to abandon a semiconductor tie-up in India highlights the mixed feelings within the industry. However, the fact that American players, such as Micron Technology, are setting up manufacturing facilities in India indicates a shift in the industry landscape.

Noboru Yoshinaga, executive vice president at Japanese chipmaking equipment maker Disco, believes that the tide has changed. This suggests that India’s potential as a semiconductor manufacturing hub is being recognized by influential industry players. Ashwini Vaishnaw, Union minister of electronics and information technology, emphasized the importance of achieving initial successes to pave the way for future projects. He also highlighted India’s wealth of semiconductor-designing engineers trained by the country’s renowned institutes of technology.

India is also deepening its partnership with Japan, a country known for its expertise in front-end processes and chipmaking equipment. The two governments recently signed a memorandum of understanding to promote semiconductor supply chain cooperation. This collaboration is expected to further strengthen India’s position in the global chipmaking industry.

Thailand, too, is vying for a spot on Asia’s chipmaking map. The Thai government has introduced corporate tax breaks to incentivize chip companies to invest in the country. In an effort to attract companies involved in front-end processes, such as semiconductor design and wafer etching, Thailand has extended the duration of corporate tax exemptions. Previously, these exemptions ran for up to eight years, but now they can last for up to 13 years.

Furthermore, Thailand is strategically developing its local industry by combining electric-vehicle (EV) assembly plants with semiconductor suppliers. As EVs are expected to incorporate more semiconductor devices than traditional gasoline-engine cars, Thailand aims to gain a competitive advantage by establishing a robust EV sector. This approach will not only enhance the country’s capabilities in the semiconductor industry but also align with global trends towards electrification.

India and Thailand are part of a group of governments that are closely monitoring the shifting dynamics of the chipmaking industry. Thailand, in particular, is positioning itself as a neutral country amidst the tensions between China and the United States. This offers chip companies an attractive alternative for investment, allowing them to mitigate risks associated with the ongoing trade disputes.

Both countries recognize the potential economic benefits of becoming major players in the semiconductor industry. As the demand for advanced chips continues to grow, securing semiconductor manufacturing investment can lead to job creation, technological advancements, and significant contributions to economic growth. The competition between India and Thailand reflects their determination to leverage this opportunity and establish themselves as key players in the global chipmaking landscape.

India and Thailand’s race for semiconductor manufacturing investment demonstrates their commitment to competing in the global chipmaking industry. While each country faces its own challenges and opportunities, they share a common goal of attracting international chip companies and positioning themselves as reliable partners in the supply chain. As the world becomes increasingly dependent on semiconductors, the success of these two countries in securing semiconductor investments will have profound implications for their economies and technological development.

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