Leaders in semiconductor in 2030 (5): India is no longer a bystander

Colley Hwang, DIGITIMES Asia, Taipei 0


The "Art of War" maintains: If you don't see chances of winning, you defend; and if you do see chances of winning, you attack. The Indians believe that their market has the greatest potential, and that the lack of foreign investment is down to investors' lack of vision. The Indians are taking up a defensive position. But in the next decade, the US-China confrontation may be opening up the best opportunity for India in half a century, and if it continues to adopt a defensive position, India will be doomed to miss out again.

On September 27, 2022, DIGITIMES Asia held the "Asia Supply Chain Summit" in Taipei, and Hemant Barge, vice president of purchasing for Tata Motors, was among those who gave a presentation. More than 2,800 people registered for the event, including over 600 from outside of Taiwan. It shows that the world is very concerned about the changes in the supply chain in Asia in the wake of the US-China confrontation.

In addition to the semiconductor industry where Taiwan and Korea play a core role, much of the focus of the event was about the shift of production bases for the automotive and ICT industries, as well as digital transformation. Gourangalal Das, director general of the India Taipei Association, and I also co-hosted an "India Night" dinner party entertaining guests that included John Deng, the minister without portfolio who is put in charge of Taiwan's New Southbound Policy, and Young Liu, chairman of Hon Hai Group (Foxconn) that has already geared up efforts investing in India.

Like China, India also hopes to attract investors from all over the world to local business opportunities created by its huge population, accelerating the development of its industries. Currently, Taiwan's Hon Hai, Pegatron and Wistron have all set up handset production facilities in India; Samsung Electronics's handset production capacity in India has already reached about 100 million units, and it is still expanding. When India has more than one-fourth of the world's handset production capacity, it can slowly establish a local ecosystem in line with market demand.

In addition, Qualcomm, Toshiba, Nvidia and AMD all have large R&D centers in India, and MediaTek runs an R&D team of nearly 1,000 people in India. For Taiwanese, India is gradually turning from a stranger into a country where they can look for business opportunities and build up industrial ecosystems.

But we think that after establishing its handset industry, India will skip notebooks and go directly for electric vehicles (EV). In the first half of 2022, the total bilateral trade between India and China was US$67.1 billion, but China's exports amounted to US$57.5 billion with India seeing a trade deficit of US$47.9 billion, most of which were electronic products, and many of them were supplied by Taiwanese companies.

Of the world's consumer market for semiconductors, computing products account for 38%. The industrial benefits of sharing a slice of the notebook industry may not be less than those from the handsets. But the notebook is a white-collar business opportunity, and for India, the value from a notebook industry may not be as high as that of handsets. India is the world's fifth largest car market and the biggest two-wheeler market. In the past, the Indian market has been dominated by local players, but now that we are entering the era of electric vehicles, changes and business opportunities are lying ahead for us.

With an economic growth of over 7% and a young population, India is attracting the attention of industrialized countries in Northeast Asia. Japan, Korea, and Taiwan are the East Asian countries facing problems of aging populations, low birth rates, and the need to move their production bases out of China. India is a country that deserves to be reassessed. But the question of whether to go to ASEAN or India first, or both at the same, involves not only corporate resources, but also the attitudes of clients such as Apple, HP and Dell, and the Indian government's ability to make supportive policies.

India has seen many opportunities coming its way, but has wasted them all. Will it be different this time? India is about to become the third largest country in the world in terms of GDP, but it has been taking a much longer than expected time for it to reach there. Alex Capri, a lecturer from the Business School at the National University of Singapore, says India has been presented with many opportunities but has failed to seize any of them. Indian prime minister Narendra Modi has vowed not to miss it again, because if it fails again, India might never be able to catch up.

(Editor's note: This is part of a series of articles that revolves around the issues of the US-China confrontation, but focuses on the problems that Taiwan, Japan, Korea, ASEAN, India and other emerging Asian countries have to face in their industrial strategies and ICT supply chains.)

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.