Taiwan clinched another victory in deepening trade ties with India through its semiconductor diplomacy. Last week, the Indian government started the construction of three new chip manufacturing facilities in Gujarat and Assam, including a fab to be built with the assistance of Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC).
The strategic use of semiconductor technology, production and supply chain diplomacy might be a convenient approach for a diplomatic breakthrough, since many governments are keen to build local chip supply and boost supply chain resilience to help them weather geopolitical tensions and prepare for contingencies such as a global pandemic. However, Taiwanese companies should be cautious in making inroads into India’s chip market, as there are multiple factors behind successfully building a chip industry.