US-China Relations / This crooked move of America will cause trouble for India, China's power will increase

US-China Relations: The interim trade deal between India and the US has reached its final stage, and it can be announced anytime. This deal is an important step towards further strengthening the economic relations between the two countries. However, in the meantime, the US has taken a step which has posed new challenges for India and poses a risk of strengthening China's position in the global semiconductor industry.

US's unexpected move: Lift EDA ban on China

The US has recently announced the lifting of restrictions imposed on the sale of Chinese electronic design automation (EDA) software. The decision reverses the restrictions imposed by former President Donald Trump, resulting in major EDA software companies such as San Jose-based Cadence Design Systems, Wilsonville's Siemens EDA, and Sunnyvale's Synopsys can now resume full collaboration with Chinese entities. The move could bring a major change towards technologically empowering China's semiconductor industry, which is a matter of concern for India.

Growing challenges for India

Ruchir Dixit, chairman of the board of directors of the Electronics and Semiconductor Association of India (IESA), has warned that China's growing capabilities could increase competition not only for India's EDA sector, but the entire electronics and semiconductor industry. "Until a few months ago, software was not considered a supply chain problem. Now, with this move, software has also become part of the supply chain, which includes everything that makes jobs and innovation possible in India," he said. Dixit also mentioned that global companies, which were considering investing in India under the 'China Plus One' strategy, may now re-evaluate their decisions.

Ban on India unlikely, but vigilance needed

Shankar Krishnamurthy, chief product development officer at Synopsys, assured that given India's ambition to build a semiconductor ecosystem and existing US collaboration, software export ban on India is unlikely. Still, Forrester principal analyst Biswajit Mahapatra warned that a strong Chinese chip industry, now with access to critical EDA software, could accelerate its R&D and manufacturing capabilities. This could lead to a surge in global market share and competition for foreign investment, especially in areas such as chip design and packaging, where India is also making progress.

India needs to act quickly

Kunal Chowdhary, partner, EY India's Inbound Investment Group, stressed the need for urgent action for India. "The global landscape is changing with the US easing EDA export restrictions for China. India should focus on developing its chip design software, not just for flexibility, but also to lead in the next era of semiconductor innovation," he said. Chowdhary advocated focused investments in R&D, intellectual property (IP) development, and intensive skill development.

Status of Semiconductor Design Engineers in India

India is already a significant player in semiconductor design. Nearly 20% of the global semiconductor design engineers are in India, especially in cities like Bengaluru, Hyderabad, and Pune. This provides a strong base for India, but experts believe there is a need to enhance chip design capabilities in advanced nodes. Jaswinder Ahuja, former managing director of Cadence India, said the immediate impact of the move on Indian companies may be limited, but the risk of potential sanctions on India in the future cannot be ignored.

India's strategy: Step towards self-reliance

India is currently focusing on mature nodes, which meet 75-80% of the global market demand. India's medium-term goal is to build a complete semiconductor supply ecosystem. For this, the government has allocated Rs 76,000 crore under the 'India Semiconductor Mission' (ISM), which provides financial assistance to promote semiconductor and display manufacturing. Also, up to 50% financial support for chip design and 6%-4% incentive on sales turnover is being provided under the Design Linked Incentive (DLI) scheme.