US, India Look to Reshape Manufacturing Landscape

The geopolitical tensions between the US and China disrupted
supply chains after sanctions against ZTE and Huawei. The global
pandemic and lockdown restrictions further added to the woes,
creating a supply-demand imbalance along with other challenges.
As smartphone and PC makers, automobile companies and other
businesses heavily rely on Taiwan, South Korea and China for
critical components and manufacturing, there is a risk in having
such a consolidated supply chain.  


Manufacturers are now looking to diversify their supply chains to
ensure events like COVID-19, natural disasters and geopolitical
tensions don’t cause disruption. To encourage domestic
manufacturers to increase production, the Indian government has
introduced the Performance Linked Incentive (PLI) scheme. It
offers incentives to companies for increasing domestic production
and reducing import bills. With this scheme, the government is
also trying to position India as a critical electronics
manufacturing hub.  


The ongoing semiconductor shortage has also convinced the US that
it too heavily relies on foreign manufacturing for domestic
semiconductor needs. To overcome the issue and also protect its
economy, the US government has also taken a similar approach as
India to leverage its technological prowess in AI, semiconductor
design, and more. It will be offering subsidies of up to $52
billion for chip manufacturing in the US.  


In the latest episode of ‘The Counterpoint Podcast’, host Maurice
Klaehne is joined by research analyst Priya Joseph and research
associate Matthew Orf to discuss how geopolitical tensions have
disrupted global supply chains. The discussion focuses on India’s
PLI scheme where Priya talks about its framework, major companies
that are participating, and more. Matthew, on the other hand,
talks about the Biden administration’s efforts to review the
supply chains for critical products, such as semiconductors, and
touches upon the US Innovation and Competition Act of 2021 that
was passed by the Senate recently.

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