Crisis-hit global chip companies vie for an Indian summer via partnership

Time of India

3 days ago

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A growing number of international companies facing financial challenges are looking to be strategic partners to Indian firms that are looking to establish semiconductor manufacturing facilities in the country.India's robust government incentives, coupled with a vast domestic market and a large talent pool, are making it an attractive destination for these firms, analysts said. ET had earlier reported that Japan's Sharp and American semiconductor giant Onsemi are among the companies that are actively scouting for partners in India.Queries sent to Onsemi and Sharp regarding their plans remained unanswered as of press time Wednesday.These companies, many of which are facing stiff competition from Chinese manufacturers, are looking at the opportunity from multiple angles, a person tracking the development said.'Chinese companies are taking over spaces that Korean and Japanese firms dominated," he said. For them, India offers a growing market. The potential of the Indian market that people have been looking at for two-three decades is now increasingly becoming a reality, he said."Many of them are interested, many of them feel they can brave this market now and the room in other markets is also not growing as quickly,' he said. 'The Chinese market is difficult to break into because there are already enough suppliers and producers there. Indian corporates and entrepreneurs are also fairly flush with money, so they are also looking for lucrative businesses to invest in. These foreign companies also have fairly decent technology. So, it is a win-win."The India Semiconductor Mission offers significant fiscal support to companies investing in silicon semiconductor fabs, display fabs, compound semiconductors/silicon photonics/sensors (including MEMS) fabs, semiconductor packaging (ATMP/OSAT) and semiconductor design.This policy has created a favourable ecosystem that is proving to be a lifeline for companies struggling with high operational costs and competitive pressures in other parts of the world. Industry analysts suggest that for these financially strained companies, a partnership with an Indian firm, backed by substantial government subsidies, presents a compelling opportunity.While India's semiconductor journey is still in its early stages, several projects are already underway. The government has approved a number of joint ventures, with both established and new players, signalling a clear intent to fast-track domestic chip production capabilities. These ventures are set to produce a wide range of chips, from those used in everyday electronics to more specialised components for the automotive and industrial sectors."India is a lucrative option for players around the globe," said Danish Faruqui , chief executive of greenfield fab/ATP projects advisory consultancy Fab Economics. "These players have been in the semiconductor industry for a while but, due to not having operational excellence, have suffered,' he said.'What is now becoming viable for them is to combine their technology with Indian capital support which is lucrative for established players in the semiconductor industry, who could be financially strained because of not having operational excellence and not having capital to scale their operational footprint to bring economies of scale."However, it isn't just India that these companies are looking at. Experts said India still needs to address critical gaps in order to ensure that this opportunity is not lost.There are specific success factors that are required other than the capital and the technology licence to reach the stage of high value manufacturing of products, Faruqui said."Those factors include trained talent, trained skill sets across a variety of functions,' he said. 'India needs to also develop these to enrich its capital so that more and more technology licensing deals happen in favour of India against multiple competing nations as most of the Southeast Asian and Middle Eastern countries too are looking to develop a semiconductor ecosystem."