USA China chip war

NEWS: India and the US-China chips war

Context

• The US-China chips war has prompted India to position itself as a player in the semiconductor technology field through a significant partnership with the US.

What is the US-China chips war?

• The US-China chips war revolves around the rivalry between the two economic powers for dominance in semiconductor technology. 
• The US has implemented restrictions to prevent China from gaining a technological advantage, while also investing in domestic chip manufacturing. China, on the other hand, aims to achieve self-sufficiency in semiconductors through its “Made in China 2025” plan. 
• The war has disrupted global semiconductor supply chains and led to a shift in alliances and trade patterns. In this war, Semiconductors have emerged as the ‘new oil’

 India’s initiatives:

• Production-linked incentive (PLI) scheme for the semiconductor industry.
• Three entities (Vedanta-Foxconn, international consortium ISMC and Singapore-based IGSS Ventures) that had applied to build the chips.
• Semicon India Programme: Launched in 2021 with an outlay of Rs 76,000 crore, the programme seeks to support the development of the semiconductors and the display manufacturing ecosystem in India.
• Fiscal support for a design-linked initiative (DLI) scheme to drive global and domestic investment related to design software, IP rights etc.

Global Initiatives for Semiconductors: 

• Semiconductor friend-shoring among the Quad members by USA, to building “resilient, diverse and secure supply chains of critical and emerging technologies”.
• US-led “Chip 4 Alliance” with Japan, South Korea and Taiwan to restrict Chinese access to chip tech.
• Taiwan produces over 60% of the world’s semiconductors and over 90% of the most advanced ones.
• “Made in China 2025” plan: to get self-sufficiency in semiconductor

Challenges for India:

• India is currently at least two decades behind in chip manufacturing
• It lacks the necessary infrastructure, uninterrupted power and water supply, and a skilled workforce.
• There is a need for the development of a comprehensive chip ecosystem and ancillary industries in India.

 Conclusion:

• Despite these challenges, India’s partnership with the US positions it in the global chip war and has the potential to elevate bilateral ties to the next level.

Practice Questions for Prelims

Consider the following statements regarding India-USA relations.
1. The U.S. was India’s biggest trading partner in 2022-23. 2. Both countries have signed ‘Security of Supply’ (SoS) arrangement’ and ‘Reciprocal Defence Procurement’ (RDP) agreement’ recently.
3. India is one of the members of “Indo-Pacific economic framework for prosperity”.

Choose the correct statement/statements-
a) 1 and 2 only
b) 2 and 3 only
c) 1 & 3 only
d) All of the above

Ans. c

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