The Indian government is in advanced talks with Taiwan about bringing a semiconductor facility worth an estimated $7.5 billion to India to provide anything from 5G devices to electric cars
According to sources, India and Taiwan are in talks on a deal that may bring chip production to South Asia as well as tariff reductions on components used to make semiconductors by the end of the year, a move that might rekindle tensions with China.
Officials from New Delhi and Taipei met recently to explore a deal that would bring a chip facility worth an estimated $7.5 billion to India. The chip plant would supply everything from 5G devices to electric cars. India is currently looking at possible locations with enough land, water, and manpower, and has stated that it will fund 50% of construction expenditures starting in 2023, as well as providing tax benefits and other incentives.
Taiwan Semiconductor Manufacturing Co. (TSMC) produces nearly all of the world’s semiconductors, which are the building blocks of modern electronics. However, as chip demand grows exponentially with the relentless march of technology, the company’s dominance puts the world in jeopardy, especially as Taiwan remains a flashpoint for tensions between the US and China.
The trade discussions take place at a time when democracies around the world are strengthening their economic and military ties in order to counter China’s growing assertiveness. While Taiwan has long sought a trade agreement with India, New Delhi authorities have been wary of upsetting Beijing, which claims the island democracy as its own.
As worldwide demand for semiconductor chips continues to surpass supply, other industries have been impacted. Vehicle manufacturers have been struck the hardest by the chip scarcity around the world, with Volkswagen, Ford, Renault, Nissan, and Jaguar Land Rover among the worst-affected. Not only the automobile industry but also consumer goods and smartphone producers are under pressure to keep up with increased demand.
India imports practically all semiconductors to meet demand, which is expected to reach $100 billion by 2025, up from $24 billion now, making these talks unquestionably necessary for India.