West Asia Conflict Raises Costs for India’s Semiconductor Ambitions

India’s semiconductor aspirations are starting to be impacted by the protracted turmoil in West Asia, as supply chain disruptions and rising crude-linked costs present difficulties, especially for those involved in assembly and testing. 

Because they are less reliant on oil and gas, experts predict that semiconductor fabrication facilities (fabs) may see cost inflation rather than sudden operational problems. They are still subject to international supply chains, though, particularly for essential supplies and machinery, and there may be delays due to disturbances in the Strait of Hormuz. 

The supply of helium, which is necessary for chip production, is a major worry. Prices have already increased due to supply restrictions, which are partially related to Qatar’s decreased LNG output. 

Rising input costs for petrochemical materials like resins and polymers, as well as reliance on imports from conflict-affected areas like Israel and Jordan, put more strain on outsourced semiconductor assembly and testing (OSAT) companies. 

Long-term disruptions could affect cost competitiveness and postpone project deadlines, even if the majority of Indian semiconductor plants are still in the development stage. The circumstance, according to analysts, emphasizes the necessity for India to strengthen its domestic raw resources ecosystem in order to lessen its dependency on international supply chains. 

Source – The Economic Times