However, he stressed that the world's fifth-largest economy could instead look at strengthening its capabilities in emerging areas such as electric vehicles and medical technologies to challenge Chinese manufacturers as the smartphone segment stagnated.
China is a dominant player in consumer electronics and smartphones, with brands such as Xiaomi, Vivo and Oppo holding significant market share globally.
In a webinar hosted by Satya Gupta, president of the Indian Electronics and Semiconductor Association, Miller said the incentive for India to also create alternative brands in consumer electronics was increasing every year.
“The fact that all foreign companies working in China feel increasingly pressured by the political pressure you get from Beijing. That gives them more incentive every year to support the development of alternative brands, so I see no reason why an India-based smartphone company couldn't produce an Indian brand and source components from India, from the US, Taiwan or Japan, and Xiaomi are displacing or displacing suppliers in that segment of the market,” he said in response to a question on India's ability to create its own product brands.
“As the electronics ecosystem in India is built out, and it is certainly receiving large amounts of new investment at the moment, it becomes much more plausible for Indian brands to source largely Indian-made components for electronics in India,” he pointed out.
“And I think smartphones are probably not the only case where that's possible. Also other types of consumer electronics. I think Chinese companies are equally vulnerable,” he added.
Responding to a question about chip design companies like Qualcomm teaming up with Indian brands to create product companies that would take market share away from Chinese companies, Miller said this is “possible and increasingly possible.”
He added that non-Chinese chip design companies were keen to have more product businesses outside China, as the prospect of diversifying the supply chain outside of China would reduce risks.
Miller said India, which has its own large market, could easily sustain its own smartphone ecosystem if American, Taiwanese or Japanese companies partnered with Indian companies to build products for the Indian market and for exports. “That will reduce the market power of Chinese companies in this segment,” he said.
He said US restrictions on China have led companies to shift production out of China. “That's why Apple will assemble a quarter of its smartphones in Tamil Nadu from next year,” he said.
The southern Indian state is home to factories of iPhone contract manufacturers Foxconn and Tata Electronics.
Miller said India could look to new sectors such as electric vehicles and medical devices, where Indian-made products could displace Chinese suppliers.
“There are places where the Chinese companies are big system-level players today, but they don't actually have any unique knowledge about the Indian market and could be displaced by Indian system-level companies,” he said.
He noted that the Chinese believe that compound semiconductors have a comparative advantage and that much more protectionism can therefore be expected in this area, starting with electric vehicles where there will be even more tariffs and more restrictions that will undermine this captive domestic market. Chinese compound semiconductors will deliver. producers. “That will provide guaranteed markets for Chinese companies even if their quality is lower,” he said.
In response, several countries such as the US, Europe and Japan have started to reduce their dependence on Chinese chips, so tariffs and restrictions are expected.
India's policies to support semiconductor manufacturing, assembly and packaging are “solid,” Miller said, adding that India will “undoubtedly” have at least two semiconductor manufacturing units by 2030, in addition to two other factories that would rely on compound semiconductors may be based.
Artificial intelligence (AI) has had a major impact on the semiconductor industry as demand has increased for technology such as graphics processing units or GPUs used for AI. Many industries are using AI to improve the speed and efficiency of their design and manufacturing processes, says Miller, who teaches international history at Tufts University.
The chip industry has also seen a greater geopolitical impact due to disputes between the US and China, Taiwan and China, and the rest of the world versus China, which has led to more fragmentation, with one side focusing on China and the other is concentrated outside China. . In this scenario, governments including the US, Japan and India have started promoting their own chip manufacturing industries, a new area that is seeing a major increase in investments.
Miller said demand for chips will largely come from the transition to electric vehicles from internal combustion engines and from GPUs for AI, and warned that supply-side risks could come from countries imposing restrictions or tariffs on the use of rivals' chips.
“That, on the one hand, will create dislocations that create opportunities if you're on one side of a tariff wall or the other side of a regulatory wall. But it also creates the risk of greater inefficiency for the entire sector,” he said.
Miller also noted that skilled labor shortages in some markets, such as the U.S., led to delays in semiconductor manufacturing projects in the pipeline there, although the number of such factories in a region like the U.S. has increased significantly, up from five to 10 . years ago.
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Published: Apr 30, 2024 5:29 PM IST