India In Talks With Taiwan For A Domestic Semiconductor Manufacturing Hub

New Delhi:In a bid to address the rising demand for chips needed for items ranging from cell phones to cars, India and Taiwan are in talks on a free trade agreement and the establishment of a semiconductor manufacturing cluster in the country.

According to reports, the two sides formed four groups, earlier this year to focus on developing a semiconductor manufacturing hub, education and training of highly specialized manpower needed for the industry, a bilateral investment agreement, and a free trade agreement.

In the middle of this year, the contacts on these problems picked up steam, and the semiconductors group met twice virtually, in August and September, whereas there was only one session of talks on the planned trade treaty.

Parties such Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC), establishing a factory in India. The Indian side has proposed many locations for the hub, but the two parties have yet to reach an agreement.

If the project is finalized, it will be just the second such manufacturing hub established by a Taiwanese company in a foreign country. TSMC, which has a market capitalization of more than $550 billion and generates roughly 54 percent of worldwide semiconductor revenues, has built a $12 billion fabrication unit in the United States that will begin production in 2024.

TSMC is also looking into the possibility of building plants in Japan and Europe.

Such investments are related to strategic benefits for Taiwan at a time when China has upped its pressure on the island, increasing incursions into its air defence zone and escalating tensions in the Taiwan Strait amid threats of invasion.

Taiwan's desire to establish a semiconductor manufacturing cluster in the United States (US) was perceived as being inextricably related to Washington's military assistance to Taipei.

Taiwan also hopes that such actions will result in more support for its other efforts, such as a position at the World Health Organization (WHO). Because of the potential for investments and manufacturing in Maharashtra and Gujarat, Taiwan is considering creating a representative office in Mumbai as part of its overall efforts to promote trade and investment.

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