How India's semiconductor revolution is shaping the global economy

CHARACTERISED as “The new Oil of the 21st century”, pundits agree that whoever controls semiconductors holds the key to the future of AI, defence, and economic influence; in short, whoever controls chips controls the world.

In an article by senior BBC Asia correspondent Suranjana Tewari titled US-China Chip War: America is Winning, the author argues that the fight for dominance in the semiconductor sector will reshape the global economy. Tewari further argues that China wants the technology to produce chips.

But the US, a source of much of the technology, is cutting Beijing off. An iPhone, for example, has chips that are designed in the US, manufactured in Taiwan, Japan or South Korea, then assembled in China. India, which is investing more in the industry, could play a bigger role in the future.

And the future, seemingly, is now. According to reports, Indian Prime Minister Narendra Modi has allocated more than $10 billion (about R191bn) to roll out India’s first indigenous semiconductor chip production, which aims to position the country as a global hub for chip design and manufacturing.

The first set of Make in India semiconductor fabrication units are said to be near completion and ready to dominate the market.

Taiwan leads the global manufacturing of chips, followed by South Korea, the US and China, which produces 20% of the chips but is blocked from advanced technology by the US. Despite controlling the designs, the US is lagging as the country primarily relies on Japan and the Netherlands for equipment and materials.

However, India is emerging as a serious disruptor in the global tech industry through its aggressive semiconductor push.

Almost every product we use today depends on semiconductors because chips are integrated in almost every electronic device humans use such as smartphones (processors, memory, 5G modems), laptops (central processing units), TVs and smart displays, automotives (electric vehicles, engine control, touch screens), robotics, medical devices, critical infrastructure such as power grids and cellular networks, drones and satellites, military hardware, AI infrastructure, encryption hardware.

Clearly, chips are the new lifeblood that controls the world.

Semiconductors have become the “foundation of economic power” in defence, artificial intelligence, national security, and technological and economic dominance. As a few countries scramble to build semiconductor fabrication plants, the eye is now on India, which sits in a strategic position over the US and China, including Taiwan. And here is why.

H-1B visas (India’s engineering and technology diaspora): H-1B Visas are the most sought-after visa type among semiconductor companies globally, especially in the US. H1-B visas are the lifeblood of US tech innovation and the shortcut to semiconductor supremacy.

Well-renowned American-born Japanese physicist Professor Michio Kaku calls the H-1B visa “America’s secret weapon”. Kaku argues that without the H-1B Visa, the scientific establishment of America would collapse because 100% of the top engineering PhD candidates are foreign-born. But now the brains are going back to China, India. There’s a Silicon Valley in India, China now… Where did it come from? It came from the US! So you remove the H-1B visa, and you collapse the American economy.”

Kaku calls the H-1B Visa, which built Silicon Valley and the Fortune Global 500 companies, the “genius visa”. Asserting that there would be no Silicon Valley without the H-1B.

The reality is that the human capital that has kept the US tech economy and scientific establishment relevant and dominant are Indian and Chinese migrants. In particular, Indians dominate the majority of tech companies that run the world and design the chips that make up the critical semiconductor industry that has seen countries wanting to go to war over them.

Leading chip manufacturers like Taiwan and Korea have also intensified efforts to attract more Indian engineers and scientists to work in their semiconductor factories.

The second point is that India is now the second-largest manufacturing hub in the world after China, and the country is also leveraging its population at a formal and informal level both for production and consumption. This puts India at a competitive advantage.

Consequently, the decision by the government of Modi to position India as a global hub for chip design and manufacturing is long overdue, as millions of Indians who have built foreign economies and technologies can now leverage their strength in their motherland. It’s only a question of time before we ask how far India has surpassed current chip designers and manufacturers.

The announcement of the final phase of India’s first semiconductor fabrication units by Minister Ashwini Vaishnaw also comes at a critical time when India, like many other countries, is confronted with a ”world on the brink of a trade war’’.

Talking to the press, Vaishnaw elaborated on how this move by India is “about creating a new ecosystem — jobs, R&D, and supply chain resilience”. According to analysts, India’s semiconductor push could generate 500 000 skilled jobs by 2030 and cut reliance on foreign chips by 30%.

Companies such as Micron, Tata, and Foxconn have already set up plants in Gujarat and Assam, with the first outputs anticipated within the next year as India aims to become technologically self-reliant.

As India sets its eyes on becoming a semiconductor powerhouse Africa watches with no concrete engagements to build semiconductor fabrication plants which can ensure that we are also competitive in the AI race, energy transition, technology and defence but in particular leverage on our raw materials such as lithium and platinum that we currently export for chip production and import as finished goods.

India is on the verge of making history.

* Phapano Phasha is the chairperson of the Centre for Alternative Political and Economic Thought, whose focus is on the Global South and BRICS Plus countries.

** The views expressed here do not reflect those of the Sunday Independent, Independent Media, or IOL.