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Taiwan quake concerns boost India’s semiconductor prospects

Experts anticipate that India will emerge as a dependable and strategic player in the global semiconductor industry in the near future.

  • India aims to be among the top five semiconductor manufacturing countries globally by 2029. The country is one of the largest markets for electronics and a significant source of tech talent

  • Taiwan’s market share in the semiconductor sector will fall from 46% in 2023 to 43% in 2027 as major industry players make strategic moves, predicts IDC

  • The recurring seismic activity in Taiwan has prompted further shifts in chipmaking and supply chains to other regions or countries that are less prone to earthquakes.

Recently, Taiwan experienced a temporary disruption in its semiconductor chip production caused by a 7.2-magnitude earthquake that hit the east coast on the morning of April 3. The tremors extended to the western part of the island, impacting major tech hubs such as Taoyuan, Hsinchu, Taichung, and Tainan.

After the major quake, production lines at Taiwan Semiconductor Manufacturing Company Limited (TSMC), the world’s largest chipmaker, were reportedly disrupted. Nvidia, another leading chip manufacturer specializing in artificial intelligence chips, was also affected. This prompted overseas memory factories like Samsung to temporarily suspend their quotations.

The natural calamity once again brought the focus back to India.

India, being one of the largest markets for electronics and a significant source of tech talent, enjoys the advantage of playing a key role in the global technology landscape.

The country is actively working towards establishing a strong semiconductor ecosystem, and currently, its semiconductor industry is on a path of growth and development.

Experts anticipate that India will emerge as a dependable and strategic player in the global semiconductor industry in the near future.

Amid Taiwan’s escalating tensions with Beijing, top policymakers in the Taiwanese government have stated that leading Taiwanese technology firms are considering relocating their manufacturing bases to India to reduce their dependence on the Chinese market.

According to policymakers from the self-governed island nation, there is significant potential for collaboration between New Delhi and Taipei in emerging and critical technologies, including semiconductor manufacturing and electronics equipment.

They mentioned that Taiwan-based tech giants are considering India as a crucial destination to fortify their global supply chains.

Reports indicate that amidst the trade dispute between Washington and Beijing and the escalating military actions by China around self-governed Taiwan, leading Taiwanese tech companies are increasingly exploring the option of relocating their production centers from China and Taiwan to other countries, including Europe, North America, the US, and India.

Describing India as an important country for Taiwan, Kristy Tsun-tzu Hsu, the director at the premier policy think-tank Taiwan ASEAN Studies Center at Chung-Hua Institution of Economic Research, mentioned that Taiwanese companies operating in China are contemplating “decoupling” the global supply chain from that country while maintaining it for domestic consumers.

India is eager to host production facilities for leading Taiwanese chip production giants, including Taiwan Semiconductor Manufacturing Company (TSMC). Meanwhile, Taiwan-based Foxconn, Apple’s largest supplier, has already established an iPhone manufacturing facility in the southern Indian state of Tamil Nadu.

The formation of the India Semiconductor Mission (ISM), coupled with the provision of substantial subsidies and a favorable business environment for major industrial players since 2021, indicates the dawn of the Indian semiconductor era.

Amidst geopolitical turbulence between major powers, India is poised to establish itself as a reliable supply chain network for semiconductors. Traditionally, this sector has been concentrated in the United States and its allies—South Korea, the Netherlands, Japan, and Taiwan—along with China.

In the shifting landscape of chip manufacturing, India and several Southeast Asian nations—Malaysia, Singapore, Thailand, Vietnam, and Indonesia—have become preferred locations for back-end assembly and testing operations. These countries also hold potential for front-end manufacturing in the future.

Experts believe that India’s entry into the semiconductor ecosystem is not only timely but also strategically significant for diversifying the global supply chain.

Ashwini Vaishnaw, the Indian Minister for Communications and IT, stated during the ground-breaking ceremony for the country’s first semiconductor fab, built through collaboration between the Tata Group and Taiwan’s PSMC in the Dholera Special Industrial Region (SIR) of Gujarat, that India aims to be among the top five countries manufacturing semiconductor chips by 2029.

“The semiconductor plant in Sanand, Gujarat, will begin producing chips in December 2024, while the Dholera plant is expected to commence chip production in December 2026,” Vaishnaw said.

“At the Dholera plant, there will be three phases of chip manufacturing: 28 nanometers (nm), 50 nm, and 55 nm. These are widely used in mobile, automobile, and power industries. Meanwhile, at the Assam plant, the technology will be entirely Indian. India aims to be among the top five semiconductor manufacturing countries globally by 2029,” the minister added.

However, geopolitical shifts are not the sole reason behind the relocation of the Taiwanese semiconductor sector, which is an extremely sensitive industry.

Questions after the quake

Taiwan’s semiconductor chip production faced a temporary disruption due to the recent quake. However, shortly after the disaster, TSMC and other tech giants confirmed that most of their chipmaking tools are undamaged and production lines are being brought back online. Nevertheless, experts have pointed out that the earthquake highlighted the ongoing risk faced by chipmakers in Asia’s quake-prone zones.
David Bader, a professor and director of the Institute for Data Science at New Jersey Institute of Technology, commented on the concentration of chipmaking in Taiwan, stating that he believes it poses an existential threat.

Experts have opined that the recurring seismic activity in Taiwan poses a potential long-term risk to the semiconductor industry. This has prompted further shifts in chipmaking and supply chains to other regions or countries that are less prone to earthquakes.

According to the latest report from the International Data Corporation (IDC) titled “The Impact of Geopolitics on Asia’s Semiconductor Supply Chain: Trends and Strategies,” significant changes have occurred in the global semiconductor landscape.

Two leading chipmakers in Taiwan, TSMC and Foxconn, have already expanded their operations overseas in response to supply chain shifts.

Besides these tech giants, suppliers of chip and electronics tools, materials, and plant builders are also leaving Taiwan as their client tech companies undertake their biggest overseas expansion in decades.

The IDC report predicts that Taiwan’s market share in the semiconductor sector will fall from 46 percent in 2023 to 43 percent in 2027 as major industry players make strategic moves.



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