Thailand, India compete for semiconductor investments
Thailand and India are competing to attract semiconductor investments, aiming to reduce dependency on the supply chain from China.
The trade dispute between the US and China regarding the transfer and export of advanced semiconductor technology has led both countries to see an opportunity to become a production base and benefit from major technology players seeking new options in the supply chain system.
Thailand’s Board of Investment (BOI) has extended the corporate income tax exemption period for semiconductor manufacturing companies in order to promote investment. Furthermore, Thailand aims to attract companies capable of producing initial-stage semiconductors, which involve more advanced technical processes than final-stage semiconductor production.
Thailand has been seen as a stabilising force in the tense situation between the US States and China, with leading companies from Japan, the US and South Korea engaging in discussions regarding investment in the country.
India too is pushing hard to establish India as a global chip manufacturing hub. During India's semiconductor industry groundbreaking ceremony in late July, Prime Minister Narendra Modi announced the country's stance and strengths.
India's determination is evident, especially since in 2021, Modi's cabinet approved a budget of 760 billion rupees (approximately US$9.15 billion) to support the semiconductor and display manufacturing industry. Several leading companies subsequently announced investment plans, with Micron Technology, an American chip manufacturer, revealing plans to build a chip factory in Krishna-Godavari, India, expected to start production within this year.
Reports indicate that Taiwan's semiconductor companies, such as TSMC (Taiwan Semiconductor Manufacturing Co.), are also considering investing in India. However, concerns about India's infrastructure, such as electricity supply, have led some companies like Foxconn to cancel their semiconductor investment plans in the country.
Noboru Yoshinaga, Deputy Head of the Japan External Trade Organisation, believes that American companies expanding in India show that the semiconductor investment landscape in India is changing.
India has been increasing cooperation with Japan in this regard. Many companies specializing in wafer and chip equipment production have signed memoranda of understanding with India and Japan to support semiconductor supply chain collaboration.
While the global semiconductor industry mostly consists of initial-stage production in South Korea, Japan, and other East Asian nations, countries in the Southeast Asian region are becoming centres for final-stage production. Given the changing business strategies of major chip manufacturers, India and Thailand are well-positioned to adapt to these shifts in the semiconductor industry.
