The India-USA Semiconductor Pact: A Major Step in National Security and Technology
This analysis, based on Shubhajit Roy’s news story captioned “India, US Ink Pact to Set up Semiconductor Fab for National Security, Next-Gen Telecom” in The Indian Express (September 23, 2024), makes the point that the India-US semiconductor pact, focusing on Shakti fabrication plant, is a strategic leap in national security and global technological advancement.
The partnership between India and the United States to build a special semiconductor factory, called Shakti, is a big milestone in their relationship. This agreement, made in September 2024, is very important for India as it helps the country move from just using chips to making them. The pact is not only a breakthrough in technology but also helps both countries strengthen their national security, improve global supply chains, and support green energy efforts. This essay will explain why the Shakti semiconductor factory is so important, how it impacts the economy and geopolitics, and what challenges must be overcome for it to succeed.
What is the Shakti Semiconductor Factory?
The Shakti semiconductor factory will make special types of materials, like infrared, gallium nitride, and silicon carbide semiconductors. These materials are important for things like national security, advanced communication technologies, and green energy. For example, gallium nitride is especially good for use in power electronics, which is needed in both civilian and military technology. The main job of the Shakti factory is to supply these semiconductors to the US and Indian defence forces, as well as to other friendly countries, helping to reduce their dependence on buying these materials from other places, particularly from China.
The India Semiconductor Mission and the US Space Force are supporting this project, which shows how much the two countries are working together. This semiconductor pact between India and the US is seen as being just as important as the Indo-US nuclear deal, because it has the power to change technology and politics in a big way.
Growing India’s Semiconductor Industry
India’s semiconductor industry is expected to grow quickly, with the market estimated to be worth more than $100 billion by 2032. This growth is happening because of government plans, partnerships with other countries, and the increasing demand for electronics in India. One of the key programs is the India Semiconductor Mission (ISM), which was launched in 2021. It provides money for companies that are building semiconductor factories. Another program, called the Design Linked Incentive (DLI) Scheme, encourages new ideas in semiconductor design. Partnerships with companies like Micron Technology and Samsung are expected to create up to 1 million new jobs in the next five years.
India also has a large group of talented workers, making up about 20% of the world’s semiconductor design workforce. This gives India a strong base to become a global hub for semiconductors. In addition, the growing market for electronics in India and the government’s all-around support help make India a great place for the semiconductor industry to grow.
However, there are challenges, such as the high costs of building semiconductor factories, the shortage of skilled workers, and issues with infrastructure. Semiconductor factories need a lot of water and electricity, which India still needs to improve. On top of that, India faces tough competition from countries like Taiwan, South Korea, and China, which are already strong in semiconductor manufacturing.
Why the Shakti Fab Matters Globally
The India-US semiconductor pact is important not only for these two countries but for the world, especially because of the competition with China. By building the Shakti fab, India is creating an alternative place to manufacture semiconductors, reducing its need to rely on China for these materials. This also gives India more freedom and control over its technology. This move fits well with the global “China+1” strategy, where big companies are looking to make their products in places other than China to avoid putting all their eggs in one basket.
The Shakti fab also helps make the global semiconductor supply chain more stable and secure. This is crucial for the United States, which is trying to get its semiconductors from different sources through the US CHIPS Act. This act aims to reduce America’s dependence on China for important technologies. So, the partnership between India and the US is not just about technology—it is also about building a strong, secure relationship that can stand up to China’s growing influence in the world of semiconductors.
Helping Green Energy
The Shakti fab is also expected to play a big role in helping green energy projects. The semiconductors made in this factory will be important for things like solar panels and electric vehicles (EVs). Electric vehicles need many more semiconductors than regular vehicles, and the Shakti fab will help meet the increasing demand for these materials.
In addition, the Shakti fab will support the development of smart grid technologies, which are systems that help manage how electricity is distributed. These systems are important because they can make the use of renewable energy sources more efficient. By focusing on power electronics, the Shakti fab will help industries use energy in smarter, more sustainable ways.
The Role of ICET
While not central to the pact, the Initiative on Critical and Emerging Technologies (ICET), launched in 2023, plays a supporting role in fostering collaboration between India and the US in fields like semiconductors, AI, and defence technology. ICET strengthens ties between the two countries, encouraging talent exchange, joint research, and technology sharing. It ensures that the India-US partnership in semiconductors is backed by a broader strategy to build resilient and secure supply chains, especially in areas vital to both national security and economic growth.
Challenges to Overcome
Even though there are many great opportunities in the India-US semiconductor partnership, there are still challenges. One of the biggest issues is the high cost of building a semiconductor factory, which often requires more than $1 billion in investment. It will be essential to secure this funding. Another problem is the lack of enough skilled engineers in India who specialise in semiconductors. Although there are many design engineers in the country, India needs more experts in device physics and process technology to really grow the industry.
There are also infrastructure problems that need to be solved. Semiconductor factories need a lot of water and power, which are not always available in every part of India. Making sure these resources are available will be important for the Shakti project’s success. Plus, India is competing with countries like Taiwan and South Korea, which already have a lot of experience and success in the semiconductor industry. India will need to work hard to catch up.
Conclusion
The India-US semiconductor pact, with its focus on the Shakti fabrication plant, is an exciting and bold step for both nations. This partnership will not only improve national security by reducing dependence on foreign semiconductors but also help India become a key player in the global semiconductor industry. The collaboration will boost green energy projects, encourage new ideas in telecommunications, and make global supply chains stronger and safer.
Although the project has a lot of promise, its success will depend on how well India and the US can handle challenges like securing enough money, developing a skilled workforce, and improving infrastructure. If these challenges are addressed, the Shakti fab will be a big achievement that shows the growing strength of the India-US relationship and could serve as a model for future projects in important technologies. The success of this partnership could change the global semiconductor industry and lead to a future that is more advanced, sustainable, and secure.
Summing up, this semiconductor pact has the power to shape the future of global technology. By using its strengths in design, innovation, and smart partnerships, India can grow to become a leader in the semiconductor world, helping both the economy and technological progress. While the road ahead is challenging, the rewards are great, making this collaboration a vital step in creating the future of technology.