PM Modi ups the ante on India’s semiconductor push-inks chip deal with Singapore

The big agenda of PM Modi's visit this time is to tap into Singapore’s semi-conductor ecosystem.

As India pitches for a bigger play in the global supply chain in the semiconductor space, PM Modi’s visit to Singapore added the firepower that the nascent sector in India needs. Prime Minister Modi visited the facilities of one of the largest companies in the Semiconductor space in Singapore with Lawrence Wong, the newly elected prime minister of Singapore. Reinforcing the intent of the two countries to collaborate in areas of design, talent, investments from Singapore into India. Singapore is one of India’s crucial strategic relationships for its proximity to China. Besides being a source of crucial strategic information, Singapore has successfully built an ecosystem for semiconductor majors -from packaging to research to manufacturing activities across the value chain that the upcoming Indian ecosystem can benefit from.

Semicon deals and more

Prime Minister Narendra Modi visited AEM, a leading Singaporean company in Semiconductor and electronics sector, the Prime Minister, according to a statement by the government has invited semiconductor companies to participate in the SEMICON INDIA exhibition to be held in Greater Noida on September 11-13.

“During the 2nd meeting of India-Singapore Ministerial Roundtable, both sides agreed to add Advance Manufacturing, with focus on semiconductors, as a pillar for enhancing bilateral cooperation. Both sides have also concluded the MoU on India-Singapore Semiconductor Ecosystem Partnership,” states the note.

Singapore’s Prime Minister, Lawrence Wong was with the Prime Minister on the visit to the AEM facility.

“This visit by both the Prime Ministers underscores commitment of both sides to develop cooperation in this area,”  stated the official release.

The visit by Mr Modi comes weeks after India’s key cabinet  ministers , including finance, external affairs were in Singapore finalising the agreements. External affairs minister, S Jaishankar in a post on X had described the talks as “productive and said the two sides explored cooperation in sustainability, healthcare and connectivity.”

Meanwhile, Singapore’s foreign minister, Vivian Balakrishnan has said that advanced manufacturing, semiconductors and aviation and maritime connectivity  are new areas of collaboration that present a ‘significant’ opportunity for both the countries.

The Big Opportunity

India’s relationship with Singapore has traditionally been warm and of strategic importance. Singapore manages a fine balancing act while maintaining its relationship with India and the China. Its proximity to China makes Singapore a crucial strategic information source for India.  In economic terms - India’s trade relation with Singapore has grown steadily - from exporting goods worth $4000 mn in 2004 to $14.41 billion in 2023-24, while Singapore’s imports into India were at $21.199 billion. Major imports from Singapore include electrical machinery, nuclear reactors, mineral fuels and mineral oils.

In bilateral terms, Singapore is India’s sixth largest global trade partner as of 2023-24, with a total trade of $35.61 billion, which is 29% of India's total trade with ASEAN.

The big agenda this time is to tap into Singapore’s semi-conductor ecosystem, say experts. India is incentivising more than 70% of the total cost in setting up a semiconductor manufacturing facility here, and various estimates suggest this market could grow to $64 bn by 2026. A research note by Counterpoint has said that policy reforms and building of semiconductor ecosystem can reduce India's reliance on imports.

Singapore, for India, presents an opportunity to leapfrog on its semiconductor journey.

While Singapore doesn’t have its own semiconductor manufacturing giants, it has built a robust and diverse ecosystem of equipment makers and material suppliers, as well as R&D and manufacturing activities across the value chain. This includes integrated circuit design, wafer fabrication as well as testing. The tiny nation accounts for nearly ten per cent of all chips produced globally.

“Singapore is five years ahead of us. (Semicon) packaging is a low hanging opportunity for us. At the moment, Malaysia is packaging all sorts of chips, but how much can they expand? We have good English speaking talent, good tech talent, and the government rolling out a red carpet. Singapore is the Asia Pacific headquarter for global MNCs who would want to tap into India. Lots of semicon ecosystem companies have offices and operations there, including equipment companies for semi fabs,” said Neil Shah of Counterpoint Research.

Recently, Qualcomm Singapore helped to test and debug the processor that enabled NASA’s helicopter, ingenuity, currently on its Mars mission. Micron Singapore developed the world’s highest density NAND Flash memory in November 2023, and has 176 layers, which 13 floors more than those on Burj Khalifa, to give a perspective.

India has made a beginning in the semiconductor space, and the ecosystem is very nascent, driven by start ups of few greenfield projects. India's design incentive scheme aims to nurture and build that ecosystem. Manufacturing of advanced chip sets (used for computation in smartphones) is done at only three foundaries in Taiwan, Korea and Intel. Counterpoint's Neil Shah says India has an opportunity when it comes to less-advanced chip sets. Micron's semiconductor plant in Gujarat is expected to launch its made-in-India memory chip soon. The hope is that Micron in India is able to pull off what it did in Singapore. And the PM’s visit could be a start to that.