Page 12 - The Indian EYE 083024

OPINION AUGUST 30, 2024 | The Indian Eye 12

world’s largest semiconductor com-
panies, like Qualcomm and TSMC,
are headquartered in Taiwan.
China and other Asian coun-
tries are ideal locations for assembly,
testing and packaging since these
are labor-intensive stages. Countries
can move up the value chain to high-
er-value activities as the country’s
economy and the skills of its work-
force grow.
The Role of Geopolitics

onsidering the size of the semi-
conductor industry (world-
Cwide industry sales totaled
$574.1 billion in 2022), its wide and
crucial usage in everyday consum-
er electronics, communications and
computing devices, in the aerospace,
automotive, medical and defense sec-
tors, and the range of employment,
innovation and economic growth
opportunities it produces, any disrup-
tion in the supply chain would result
in a worldwide economic slowdown. The MoC between India and Japan can deepen engagement in maritime connectivity and trade as digitalization and new developments in AI and
The geographic concentration automation can facilitate better efficiency in port and shipping services (File photo)
of semiconductor production in the
context of the COVID-19 pandem- range of activities from R&D, manu- national order. vancing and important industry, has
ic and rising geopolitical tensions in facturing and sales as well as training The semiconductor partnership gained geopolitical importance.
the Indo-Pacific, which have allowed and development of human resourc- between India and Japan can be ex- The geopolitical tensions in the
countries to leverage their compara- es, is said to play a major role in the pected to further support other ini- Indo-Pacific have resulted in the
tive advantage for political reasons, partnership between India and Ja- tiatives in the region, such as the In- need for diversification in the supply
have exposed the vulnerabilities of pan. India will benefit from this part- do-Pacific Oceans Initiative (IPOI), chains to avoid disproportionate de-
the supply chain. nership by sharing and transferring which was announced by India in pendence. International collabora-
Due to these reasons, the semi-
conductor industry has acquired stra- experience and knowledge, specifi- November 2019 during the 14th East tions are based on the logic of mutual
cally from companies engaged in the
Asia Summit (EAS) held in Bangkok,
benefit and comparative advantage
tegic importance. This realization stages mentioned above. This will be Thailand. The IPOI aims to establish but also on shared values and inter-
has resulted in the need for diversifi- facilitated by the several initiatives an open, inclusive, non-treaty-based ests. This partnership particularly
cation of the supply chain.
launched by the Indian government global initiative through practical co- brings together two countries that
India-Japan Partnership to develop a semiconductor ecosys- operation. Seven pillars have been share the same values and vision for
tem. formulated for this cooperation in the Indo-Pacific.
he MoC signed during a meet- These initiatives include incen- areas of security, safety, resource de- Moreover, it allows India to tap
ing between Indian govern- tives for setting up business in India, velopment, science and technology, into the knowledge and expertise of
Tment officials and a Japanese such as access to skilled manpower, resilient infrastructure and marine Japan, having been at the top of the
delegation led by Nishimura Ya- R&D infrastructure, tax incentives environment ecology. semiconductor industry for decades,
sutoshi, the Minister of Economy, and proposed funding of 50% of The MoC between India and Ja- and Japan to tap into the robust de-
Trade and Industry of Japan, is one the total project cost. Moreover, pan can deepen engagement in mari- sign sector and incentives offered by
such attempt to diversify the semi- even though India is heavily reliant time connectivity and trade as digita- the Indian government to set up fa-
conductor supply chains. This MoC on imports for its domestic market lization and new developments in AI cilities.
follows a series of other such efforts, for semiconductors, it has a vibrant and automation can facilitate better Considering this, the MoC
as Japan is the second Quad partner design ecosystem. The world’s top efficiency in port and shipping ser- brings in the opportunity for India to
after the US to sign a deal with India eight semiconductor companies have vices and overall maritime transport fulfil its potential in the semiconduc-
on semiconductor supply chain and design centers in India, which makes to stimulate economic growth in the tor industry and for Japan to work
innovation. India a favorable partner for Japan. Indo-Pacific. Overall, the MoC on on revitalizing its position and value
Japan is focused on revitaliz- Moreover, it is important to semiconductor supply chain partner- while working towards creating resil-
ing its semiconductor industry as its note that due to the nature of geo- ship would eventually bolster India’s ient supply chains.
share of the global semiconductor political tensions in the region, states policy of Security and Growth for All
market declined from 80% in the want to collaborate with like-minded in the Region (SAGAR) by strength- Ms Gayatri Singh is a Research
1980s to around 10% in recent years. countries. India and Japan’s special ening economic and security cooper- Intern at the Indian Council of World
However, Japanese firms still strategic partnership would place ation with its maritime neighbors. Affairs, New Delhi. Views expressed are
play a major role as suppliers of additional value on facilitating the Conclusion personal.
chemicals, materials and equipment, semiconductor supply chain cooper-
which are critical for semiconductor ation for the best interest of the re- he MoC signed between In- This article first appeared in the View-
development. Rapidus, a Japanese gion as the two countries emphasize dia and Japan depicts how point section of the website (www.icwa.
government-backed semiconduc- shared values of freedom, openness, Tthe semiconductor industry, a in) of Indian Council of World Affairs,
tor company, which is engaged in a transparency and a rules-based inter- technologically and economically ad- New Delhi, in August 2024

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