Davos 2024 | 'Chip War' author says the world sees India as an attractive alternative to China

Highlighting concerns about sustainability and profitability, Miller expressed worries about the massive subsidies by China, surpassing the rest of the world combined. He cautioned against directly competing with China and stressed the need for a targeted and differentiated strategy.

For context, China boasted chip subsidies worth at least $150 billion in 2022. Last September, China’s Ministry of Finance further upgraded the country’s tax credit for investments in semiconductor R&D by 20%.

Regarding India's chip design capabilities, Miller recognised the wealth of talent in India but urged a shift towards building Indian brands that design chips for global markets, moving beyond working for foreign firms.

On the link between design and manufacturing, Miller emphasised a segmented strategy based on market focus, aligning design, manufacturing, assembly, and packaging. He praised India's growth in every part of the semiconductor ecosystem, making alignment more feasible.

"I think you've got to line up the design, the manufacturing, but also the assembly and packaging, which is also a place where India is investing in. Foreign companies are looking at India as an attractive location. The good news is that every part of the ecosystem in India is growing. And so that's going to be easier than in the past to line up these different parts of ecosystems," Miller said.

Addressing geopolitical tensions, particularly around Taiwan, Miller observed a shift in supply chain structures. He identified India as a major beneficiary of the trend, citing Apple's decision to shift a massive chunk of its iPhone assembly to India due to concerns over China-Taiwan tensions. "...that's precisely because Apple is worried about China-Taiwan tensions and they're far from alone — the entire electronics industry is moving right now, not completely, but there's more bifurcation between a China-focused sphere and the rest-of-the-world sphere and India is going to be a real beneficiary of that trend," he said.

Discussing global supply chain movements, Miller pointed to Southeast Asia as a significant focus for assembly, packaging, and semiconductor design. He also highlighted the competition from advanced economies such as Europe and Japan.

Looking ahead to 2024, Miller anticipated increasing specialisation of semiconductors around AI applications.

"I think the key trends are first the increasing specialisation of semiconductors around AI applications — we've seen last year the extraordinary growth of NVIDIA, which sells GPUs that are used to train AI systems. But I think that's just the first of what's going to be a series of innovations that are designed to make AI more power-efficient and more cost-effective in different use cases," Miller added.

He emphasised the critical risk of supply chain resilience, cautioning against underestimating disruptions driven by tensions in China and Taiwan.

"We've seen supply chains shift slowly over the past couple of years, but they're just so complex. There's so much investment involved, that it's going to be a long-running trend. And I think the major risk is that we've underestimated the risk around China and Taiwan and we get disruptions driven by that," he added.

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