Why Intel is Not Considering to Build a Fab in India

Introduction

In a surprising move, Intel’s decision to halt semiconductor manufacturing plans in India has sparked concerns about the nation’s readiness for chip production. This setback raises questions about infrastructure, regulations, and talent acquisition, casting doubt on India’s role in the global semiconductor industry.

However, the supply of semiconductors has been struggling to keep up, leading to a worldwide chip shortage that has affected various industries and sectors.

One of the reasons for the chip shortage is the concentration of semiconductor manufacturing in a few countries, mainly China, Taiwan, South Korea, and the US. These countries account for more than 80% of the global chip production, according to the Semiconductor Industry Association.

Many countries, including India, have been trying to reduce their dependence on foreign chips and boost their domestic semiconductor industry. However, India imports more than 90% of its semiconductor needs, mostly from China. This not only creates a huge trade deficit, but also poses a risk to the country’s digital sovereignty and security.

To address this challenge, India has been offering various incentives and subsidies to attract global chip makers to set up manufacturing units in the country. However, so far, none of the major players have shown interest in investing in India’s semiconductor sector. One of them is Intel, the world’s largest chip maker, which has no plans to build a semiconductor plant or any type of manufacturing facility in India at present.

Why Intel is Not Building a Fab in India

Intel is one of the most prominent and influential companies in the global semiconductor industry, with a market share of about 9%. Intel has been operating in India for more than three decades, and has invested over $9 billion in the facility.

However, Intel has no plans to expand its presence in India beyond its design centre. According to Santhosh Viswanathan, Vice President and Managing Director of Intel, India Region, the company does not see the need to build a semiconductor plant or any type of manufacturing unit in India at this stage.

He said that Intel is satisfied with its current global supply chain, which consists of its own fabs in the US, Ireland, and Israel, as well as its foundry partners in Taiwan and China.

Viswanathan also said that Intel is not looking for any incentives or subsidies from the Indian government to set up a fab in the country. He said that Intel’s decision is based on its long-term strategy and vision, not on short-term benefits or costs.

He added that Intel is not ruling out the possibility of building a fab in India in the future, but it is not on the cards right now.

What are the Implications of Intel’s Decision

Intel’s decision to not build a fab in India has mixed effects on India’s digital economy and innovation.

Intel’s decision may affect India’s geopolitical and strategic interests, as the country may become more dependent on China for its chip imports, which could compromise its national security and foreign policy objectives.

China and Hong Kong are the largest source of India’s chip imports, accounting for more than 50% of the total value in 2019. China is also investing heavily in its own semiconductor industry, aiming to become self-reliant and dominant in the global chip market.

India may face challenges in balancing its economic and security interests, as well as its relations with other countries, such as the US, Japan, and Taiwan, which are also involved in the global chip supply chain.

Intel’s decision may also affect India’s innovation and intellectual property (IP) rights, as the country may lose out on opportunities to develop and protect its own chip technologies and designs.

India has a low share of global chip patents, accounting for only 0.3% of the total in 2019. India also faces challenges in enforcing its IP rights, as it ranks 40th out of 53 countries in the International IP Index 2020.

Conclusion

Intel is one of the world’s leading semiconductor companies, with a strong and long-standing presence and engagement in India.

However, Intel has no plans to build a semiconductor plant or any type of manufacturing facility in India at present, citing its global strategy and vision, as well as the high costs and low demand of setting up a fab in the country.

Intel’s decision highlights the challenges and limitations of India‘s semiconductor industry, which is vital for the country’s digital sovereignty and security.

India needs to address the issues and opportunities of its semiconductor industry, both by attracting and retaining global chip makers like Intel, and by developing and nurturing its own indigenous chip makers.