Let's start with a "joke": an Indian went to buy a refrigerator, and the American clerk asked him what model he wanted, and he said he wanted the largest one. The clerk asked him what he wanted to put in and he said he wanted to put a TV. The clerk asked him why he kept the TV in the refrigerator, and he said it was because he didn't have a TV stand in his house.
Although this joke is a bit cold, it also reflects a real problem: some things are not bought if you want, and you can put them if you want. Just as a TV can not fit in any refrigerator, a large stock of high-end chips can not be digested by any country.
Recently, on the sidelines of the G20 summit in New Delhi, US President Joe Biden and Indian Prime Minister Narendra Modi had a "friendly and fruitful" meeting. The leaders of the two countries discussed strengthening cooperation between the two countries in various fields and signed a series of important agreements. Most notably, in the semiconductor supply chain, the United States and India agreed to jointly build an "open, reliable, secure and resilient technology ecosystem and value chain."
As we all know, the background to this agreement is that the United States announced a decision in June this year to ban the export of high-end chips to China to combat China's rise in the semiconductor sector. The decision sparked turmoil in the global chip market and put the United States itself in an awkward position: the United States has a large stock of high-end chip capacity, but it may lose its largest market because of a ban. Because with the exception of China, other countries either don't have enough demand or don't have enough digestive capacity.
As a rapidly developing emerging market with a population of 1.4 billion, India has naturally become the ideal "takeover man" in the eyes of the United States. The United States hopes that through cooperation with India, it can not only solve its own high-end chip production capacity stock problem, but also create a strategic partner against China. But can India really accept the stock of US chips transferred from exports to China? This problem is not simple, we need to analyze from the following aspects.
U.S.-India consensus on the semiconductor supply chain
During the meeting, both Biden and Modi stressed the importance of the semiconductor supply chain and said they would strengthen cooperation between the two countries in this area. According to the joint statement, the two countries will build an open, reliable, secure and resilient technology ecosystem and value chain based on mutual trust and understanding through the Indo-U.S. Critical and Emerging Technologies Initiative (iCET) to support mutual interests and democratic institutions.
To achieve this goal, the two countries have also announced a number of specific cooperation projects. Most notably, U.S. chipmaker Micron Technology will invest more than $800 million to build a new semiconductor test and packaging plant in the Indian state of Gujarat. This is another major foreign investment project after TSMC announced the establishment of a 12nm wafer fab in Bangalore, India, in April this year. These projects will help improve India's capacity in the midstream and downstream of the semiconductor industry chain and create more jobs for India.
In addition, Applied Materials announced that it will establish a semiconductor commercialization and innovation center in India to promote the diversification of the semiconductor supply chain. Lam Research will train 60,000 Indian engineers to accelerate India's semiconductor education and workforce development goals. These projects will help to improve India's level of semiconductor design and R&D and train more talents for India.
These cooperation projects show that both the United States and India are interested in building a more balanced and diversified global landscape in the semiconductor field to reduce dependence on single-source markets such as China. This is also in line with the two countries' initiatives at the G20 summit to build reliable, secure and resilient global supply and value chains.
The content of scientific and technological cooperation between the two countries
During Biden and Modi's meeting, they also discussed various aspects of scientific and technological cooperation, including space exploration, quantum computing, biotechnology, and more. The two countries will strengthen scientific and technological exchanges through the India-U.S. Partnership on Science and Technology and Innovation to promote economic growth and social well-being, the joint statement said.
In order to achieve the goal, the two countries announced a number of specific cooperation projects. Among them, NASA and the Indian Space Research Organization will cooperate in lunar and Mars exploration missions to enhance space science and technology capabilities.
The U.S. Department of Energy and India's Ministry of Science and Technology will work together to establish a quantum computing center to promote the development of quantum information science. The center will raise the level of quantum computing, quantum communication, quantum encryption and other fields in the two countries.
The U.S. Department of Health and Human Services and India's Ministry of Health and Family Welfare will advance biotechnology cooperation in vaccine development, antibiotic resistance, gene editing, and other areas to improve the capabilities of the two countries in biomedicine, agriculture, and the environment.
These collaborative projects demonstrate the intent of the United States and India to build closer scientific and technological cooperation to address the world's challenges and opportunities. This is in line with the initiatives of the two countries at the G20 summit to strengthen technological innovation and digital transformation.
The impact of the Biden administration's ban on chip exports to China on India
In the field of communication between the United States and India involving new technologies, semiconductors are the most sensitive and important. Because semiconductors are the core and foundation of various advanced technologies in the world today, whether it is electronic devices, communication networks, artificial intelligence, cloud computing, automatic driving, etc., they are inseparable from the support of semiconductors. China is the world's largest semiconductor consumer market and the world's largest semiconductor importer.
Therefore, when the United States announced a ban on the export of high-end chips to China, it was actually imposing an economic sanction on China, trying to weaken China's development in the semiconductor field and hinder China's progress in other related fields. This decision also caused a strong reaction from the Chinese government and enterprises, and the Chinese side said that it would take all necessary measures to protect its legitimate rights and interests, and accelerate the pace of independent research and development and production of chips.
So, what is the impact of the US ban on chip exports to China for India? On the surface, India appears to be a beneficiary, as the U.S. will shift chips that would otherwise be exported to China to India, so that India can get more chip supplies and thus improve its competitiveness in various fields. However, if you analyze it deeply, you will find that India is not a real beneficiary, but a potential victim.
First of all, India's current level of industrial development cannot accept the huge stock of semiconductor chips transferred from China. Because India's ability in the upstream of the semiconductor industry chain is very weak, it does not have its own chip manufacturing plant and does not have its own chip design company. India can only rely on imports or foreign capital to meet its own chip needs, and most of them are low-end or mid-range chips. The chips that the United States has banned from exporting to China are high-end or ultra-high-end chips, which require supporting equipment, software, talents and markets to use and digest, while India does not. Just as a television can not fit in any refrigerator, high-end chips cannot be produced or digested in any country.
Second, if India accepts the high-end chip stock of the United States, it will lose the motivation and opportunity to independently develop the semiconductor industry. Because the purpose of the United States is not to really help India improve its capabilities in the semiconductor field, but to use India as a pawn to counter China's rise in the semiconductor field. The United States will only provide India with finished chip products, not the most advanced chip technology to India. As a result, India will fall into a passive situation of dependence on the United States, unable to form its own innovation capabilities and competitive advantages. Just like eating someone else's leftover meal, not only is it not nutritious, it can also be toxic.
Finally, if India accepts the US chip stock, it may fall into a situation of "competition" with China in the chip field. Because China will not sit idly by while the United States uses India to suppress its own development in the semiconductor field, and China has enough means and resources to deal with the collusion of the United States and India. China can reduce its dependence on U.S. chips by strengthening independent research and development and production of chips, and can break the U.S. monopoly on the global chip market by strengthening cooperation with other chip-producing countries such as Europe, Japan, and South Korea. In this way, India may fall into a dilemma of becoming a pawn of the United States to confront China in the field of chips.
To sum up, we can see that the cooperation between the United States and India in the field of semiconductors, although it looks beautiful, actually has many hidden dangers and risks. The U.S. goal is not to really help India improve its capabilities and status, but to use India as a tool to counter China's rise. If India follows the footsteps of the United States, it will lose the motivation and opportunity for independent development and destroy Sino-Indian relations. This is not good for India's long-term interests.
Therefore, India should remain sober and rational, not be fooled by the sweet words of the United States, and not be tempted by the "high-end chips" of the United States. India should adhere to the path of independent innovation and self-reliance, strengthen its R&D and production capacity in semiconductors and other fields, and reduce its dependence on external supplies. At the same time, India should also maintain friendly and cooperative relations with China, respect each other's core interests and major concerns, and avoid unnecessary conflicts and frictions. In this way, real development and prosperity can be achieved in India.
Dear reader friends, what do you think about the topic of this article? Do you think India will be able to accept the stock of US chips transferred from exports to China? How do you think India should handle its relationship with the United States and China? You are welcome to leave a message in the comment area to discuss this topic with us. Thank you for reading!