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Strategic vision: India’s MSP membership paving the path to semiconductor independence

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By Yash Mahendra, Vice President- Business Development(North America), Moglix

According to S&P Global Mobility, the lack of necessary semiconductors in 2021 directly resulted in more than 9.5 million units of global light-vehicle production being lost. During this same period, when the PlayStation 5 console was so difficult to get, the chip shortage was the primary culprit. Lisa Su, CEO of AMD, makers of the PS5 processors, spoke of this shortage, saying, “The industry does need to increase the overall capacity levels.”

Now, in 2023, though the semiconductor crisis has largely been resolved, uncertainties around a fully secure future still loom large. In the face of potential future risks, India has been taking ambitious steps towards achieving semiconductor independence, minimising its heavy reliance on complex supply chains. Similarly, having secure access to the critical minerals that serve as the building blocks of semiconductors has become an overwhelming imperative, as prominently highlighted by India’s recent joining of the Mineral Security Partnership (MSP). As India builds resiliently towards semiconductor independence, creating effective procurement strategies and local partnerships is now the key to realising long-term visions.

Understanding India’s Semiconductor Landscape and Mineral Dependencies

Recent reports from the IBEF show that the Indian semiconductor market is expected to reach a staggering $55 billion by 2026. Furthermore, India stands as a leading chip designer, with over 30,000 skilled experts working in this space. However, the problem lies in India’s heavy reliance on semiconductor imports. Currently, all of India’s semiconductors are imported, with approximately 95% of the country’s supply coming from countries such as China, Taiwan, Singapore, and South Korea. Though recent developments such as the establishment of the India Semiconductor Mission (ISM), a Memorandum of Understanding (MoU) with the US, and a government-approved $10 billion incentive package for semiconductor manufacturers represent prominent steps on the road to progress, our country’s semiconductor landscape is still at a nascent stage.

Similarly, critical mineral resources, representing the core constituents of semiconductors, are also scarce within our country. Recently, in a report titled “Critical Minerals for India,” the Ministry of Mines identified 30 critical minerals, such as lithium, cobalt, silicon, and rare earth elements (REE), as essential assets for the development of the country. Except for a few elements such as copper, gallium, graphite, cadmium, and titanium, India is still completely dependent on imports for these essential minerals. And with elements such as germanium and gallium being pivotal for the production of semiconductors, it’s evident that resilient supply chains and secure access to these essential minerals are central to India’s vision for semiconductor independence.

India’s MSP Membership: A catalyst for semiconductor independence

Understanding the necessity of bolstering critical mineral supply chains, in June 2023, India joined the Mineral Security Partnership (MSP), a US-led alliance of 13 countries and the EU. This partnership aims to accelerate the creation of sustainable critical mineral supply chains through government collaborations and strategic projects.

Membership in the MSP gives India the opportunity to attract increased investments from fellow member governments and private entities, fostering collaboration across the value chain. Furthermore, it ensures secure access to critical minerals at a more favorable cost, enhances supply chain resilience, and provides a platform for knowledge exchange and technological growth. Beyond these advantages, joining the partnership enables India to strategically move away from China, creating opportunities for more profitable avenues and strengthening supply chain robustness. With higher investments flowing into India, local semiconductor manufacturers gain the resources and support to explore innovative pathways and flourish.

What’s more, it isn’t just the semiconductor industry that reaps the benefits; joining the MSP gives India the resources to explore its own mines and localise supply chains, serving as the backbone for monumental milestones such as Mission 500GW and more. Recent discoveries, such as the 5.9 million tonnes of lithium reserves found in Jammu and Kashmir, are promising signs that our country holds immense potential.

Government initiatives driving semiconductor independence

Backed extensively by the Government of India and a large pool of talented engineers, India’s quest for semiconductor self-reliance has taken full flight. Especially after joining the elite MSP, the developments in the country’s semiconductor landscape are truly ambitious.

● Micron, in collaboration with the Government of India, is establishing the country’s first semiconductor plant with a total investment of $2.75 billion, out of which $825 million is provided by the American company. According to the external affairs ministry, “Prime Minister Modi has invited Micron Technology to boost semiconductor manufacturing in India.” The ATMP is set to open in Gujarat next year.

● On November 24, 2023, India and the EU signed an MoU regarding semiconductors with the goal of nurturing a resilient supply chain and driving innovation.

● According to Business Today, Larsen & Toubro is planning to establish a subsidiary with an investment of Rs 830 crore in the fabless semiconductor chip design sector.

Conclusion

India’s inclusion in the MSP marks a prominent step towards achieving the vision of semiconductor self-reliance. Having faced the challenges of a global semiconductor shortage, India is now actively working towards fortifying supply chains and lessening mineral dependencies. Joining the MSP not only secures critical mineral access but also fosters collaboration, resilience, and knowledge exchange. As India strives towards semiconductor independence, backed by effective government initiatives and meaningful international collaborations, the country is set to achieve unprecedented economic milestones, becoming a true powerhouse in the semiconductor ecosystem.

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