India considers over $1 billion in cash incentives for every chip maker setting up in country – media

The world’s second-biggest cellphone manufacturer, India, wants to lure semiconductor companies to the country to boost its smartphone assembly industry and strengthen its electronics supply chain, sources told Reuters.

“The government will give cash incentives of more than $1 billion to each company which will set up chip fabrication units,” an unnamed senior government official was quoted by the agency as saying. “We’re assuring them that the government will be a buyer and there will also be mandates in the private market [for companies to buy locally made chips],” the official added.

A second government source, who also declined to be identified, said the authorities had not yet decided how to disburse the cash incentives, and had asked the industry for feedback.

According to the sources, India wants to establish reliable suppliers for its electronics and telecoms industry to cut its dependence on China. Chips made locally will be designated as "trusted sources” and can be used in products ranging from CCTV cameras to 5G equipment, the first said.

China’s soaring imports of semiconductors, the rise in the electronics industries, and the jump in technology use during the pandemic, have combined to create a perfect storm on the global semiconductor market, the supply chain of which is strongly interconnected.

All this led to a global shortage of semiconductors, which are now perceived as the ‘new oil,’ with governments across the world pushing for the construction of semiconductor plants. Currently, Taiwan and South Korea together account for a massive 83% of global processor chip output and 70% of memory chip production.

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