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Source: The post is based on the article “The unmaking of Vedanta-Foxconn’s chip dream: What went wrong?” published in Indian Express on 11th July 2023
What is the News?
Taiwanese electronics manufacturer Foxconn has announced that it has withdrawn from a joint venture with Vedanta Ltd which was set up to produce semiconductors in India.
Why is chipmaking crucial for India?
Prime Minister has made chip manufacturing a top priority for India’s economic strategy. This is because:
Firstly, Chips are an integral part of pretty much all electronic products so making them in India will massively improve the country’s net value addition to the overall electronics manufacturing process.
Secondly, building semiconductors in India will eventually help India reduce its imports. The demand for semiconductors in India will reportedly reach around USD 100 billion by 2025, up from the current demand of USD 24 billion.
Thirdly, semiconductor manufacturing also has strategic advantages, as countries don’t want to depend on their imports for essential infrastructure like defence and power.
Fourthly, China is currently one of the major destinations for chips manufacturing. As more companies are trying to diversify their bases from China, India has an opportunity to emerge as a reliable destination.
– Note: The United States of America has also passed the CHIPS Act in 2022 providing subsidies of around $280 billion for manufacturing chips in the country. It has also imposed additional restrictions and sanctions on the Chinese semiconductor industry.
