Semiconductor pact among 4 signed by India and Singapore

Last Updated07/09/2024

Focus on chip manufacturing during PM Modi’s visit to Singapore is of great geo-strategic and geo-economic importance

Prime Minister Narendra Modi visited Singapore as part of a two-nation trip to South-East Asia, following his visit to Brunei Darussalam, marking the first-ever visit by an Indian PM to Brunei.
In Singapore, PM Modi, along with newly elected Prime Minister Lawrence Wong, focused on key areas such as semiconductors, digital technologies, health, and skill development, enhancing cooperation between the two nations.
A significant outcome of the visit was the India-Singapore Semiconductor Ecosystem Partnership, signaling India's increasing focus on building its semiconductor capabilities.

The significance of semiconductors in industries ranging from defense to consumer electronics has made their production a strategic priority for India.
Disruptions during the Covid-19 pandemic and rising tensions in the Taiwan Strait and South China Sea have emphasized the importance of reducing reliance on foreign sources, particularly from China.
The India Semiconductor Mission, launched in 2021 with a Rs 76,000 crore incentive scheme, seeks to make India self-reliant in chip manufacturing by offering subsidies for setting up plants.
- In February 2023, a partnership between the Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) was announced, and five semiconductor projects have already been approved.

Singapore has established itself as a global player in the semiconductor industry, contributing 10% of the global semiconductor output and 20% of semiconductor equipment production.
Its success stems from early investments in the 1970s, guided by the vision of its first Prime Minister, Lee Kuan Yew, who capitalized on partnerships with U.S. firms like Texas Instruments and National Semiconductors.

Several aspects of Singapore’s semiconductor journey hold valuable lessons for India as it seeks to build its own ecosystem:
- Infrastructure and Connectivity: Singapore’s Wafer Fab Parks, which provide customized infrastructure for semiconductor companies, demonstrate the importance of creating dedicated zones for the industry.
- Skilled Workforce: Singapore’s universities offer specialized programs in microelectronics and IC design, collaborating with companies on research to nurture talent. India, with its large pool of engineering talent, can benefit from similar initiatives.
- Stable Business Environment: Ensuring a stable, business-friendly environment is critical for attracting semiconductor investments.

Although Singapore is a global semiconductor hub, its industry focuses on mature-node chips (28 nm or more), used primarily in automobiles and industrial equipment.
It lacks the capability to produce high-end logic chips used in AI and advanced technologies. Additionally, rising production costs and limited land and labor resources may push Singaporean firms to expand operations abroad.

Land and Labor Availability: India’s competitive labor costs and abundant land could make it an attractive destination for Singapore-based semiconductor companies looking to expand.
Knowledge Sharing: India can benefit from Singapore’s expertise in semiconductor park management and collaborate on talent development and research.
Equipment and Material Manufacturers: Engaging with Singapore’s semiconductor equipment and material suppliers can further bolster India’s efforts to develop a robust domestic semiconductor ecosystem.