India-EU semiconductor MoU paves the way for forging technological resilience and collaborative innovation

The European Union (EU) and India recently formalised a crucial partnership through the signing of a Memorandum of Understanding (MoU) on semiconductors. This strategic move, a part of the India-EU Trade and Technology Council, holds significance in the contemporary era where semiconductors play a central role in global technological advancements. Semiconductor chips, fundamental to modern technology, serve as the backbone of the contemporary world. However, both the EU and India have found themselves dependent on external sources, some of which have proven problematic, to produce various chip types and components in the manufacturing chain. India’s substantial reliance on imported semiconductors, with approximately 95 percent of its supply coming from nations like China, Taiwan, South Korea, and Singapore, has exposed vulnerabilities, particularly evident during the pandemic. The disruptions caused by the Covid-19 crisis, combined with heightened demand, have led to shortages across numerous economic sectors, raising concerns about potential societal and economic consequences. The conflict in Ukraine has further underscored these vulnerabilities, resulting in scarcities of neon gas, a crucial component for powering lasers in advanced semiconductor lithography machines. The absence of neon could potentially bring chip production to an abrupt halt, emphasizing the need for strategic collaboration. To address these challenges and drive long-term strategies, the India Semiconductor Mission (ISM) has been established. The ISM aims to implement efficient schemes and develop a sustainable semiconductor and display ecosystem. India has emerged as a significant player in semiconductor design and is actively pursuing aspirations to develop manufacturing, packaging, and indigenous chip designs. The growth of semiconductor-related startups in India reflects the nation’s ambition to become a global hub in this sector. The recently concluded MoU between the EU and India signifies a positive turning point. It outlines the exchange of experience and best practices, constituting a coordinated mechanism for the implementation of industrial policies. By sharing information about trade barriers and disruptions, the agreement recognizes the importance of collaborative efforts to avoid vulnerabilities. The MoU also emphasises joint ventures in technology partnerships and manufacturing facilities, contributing to the development of resilient supply chains. This collaborative effort aligns with India’s government initiatives, such as the National Policy on Electronics (NPE), aimed at promoting domestic manufacturing and reducing dependence on imports. The MoU serves as a complement to these efforts, marking a positive beginning for cooperation in various strategic areas. The EU and India are positioned to establish an interdependent ecosystem through joint research and technology transfers. The MoU addresses transparency in subsidies for the semiconductor sector, emphasizing the advantages of shared knowledge and resources. Most European and Indian chip subsidies have traditionally been provided by state and local governments, reflecting the economic importance of semiconductor fabrication facilities to local economies. The transparency, in this case, is about emphasizing the advantages of shared knowledge, resources, and expertise to create a more inclusive and cooperative approach, encouraging joint ventures or collaborative projects where both parties have a stake in the success of the endeavor, reducing suspicions and misunderstandings, and sharing research facilities, access to complementary technologies, or joint funding opportunities that make collaboration more appealing. To ensure a successful collaboration in the semiconductor mission, the EU and India must strengthen ties with international semiconductor companies. This involves leveraging their expertise and technology through joint research projects, knowledge exchange, and skill development. Launching common projects in the semiconductor industry is essential to enhance the skills of engineers and researchers in semiconductor design and manufacturing. Common projects on semiconductor manufacturing facilities, requiring significant infrastructure and investment, are also imperative. In conclusion, the MoU reflects political will, and it is a positive step towards building an interdependent ecosystem between India and the European semiconductor industries. It addresses challenges, promotes transparency, and establishes a foundation for future cooperation in strategic areas essential for technological advancement. The author is a Professor at ULB, Brussels, Senior Expert @EU_Commission, diplomat, Stanford Center for Internet. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.

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