India and Singapore agreed to ramp up collaboration in semiconductors and digital technologies, seeking a bigger role in a global chip supply chain that is being reshaped by tensions between the US and China.

During a two-day visit by Indian Prime Minister Narendra Modi to the city-state, the countries signed agreements to cultivate talent in chip design and manufacturing, and facilitate Singaporean tech investment in India, according to a statement from the Indian government on Thursday. The nations will also work more closely together in cyber security, fifth-generation mobile networks, super-computing and artificial intelligence (AI).

Singapore, India and Malaysia are among Asian economies that have emerged as beneficiaries of the prolonged US-China chip war that has rattled the global chip market, which is on track to hit US$588 billion  in sales this year. Both China and western countries are racing to establish stand-alone supply chains to avoid geopolitical risks, creating business opportunities for the industry.

While India’s semiconductor industry is in its infancy, Singapore has played a significant role in the sector for decades. The city-state is home to some of the largest chip manufacturing plants in Southeast Asia, hosting international names from NXP Semiconductors NV to Micron Technology Inc. The island nation boasts a legion of chip research and engineering talent, as well as abundant venture capital for chip start-ups.

The tie-up also showcases Modi’s ambition to turn the world’s most populated country into a technology superpower, in which a strong semiconductor ecosystem is crucial. During his trip to Singapore, he met with Prime Minister Lawrence Wong and is expected to meet with other key officials in the city-state. The two nations also signed deals in the areas of health, medicine and skills development.

Closer ties with India in semiconductors would help Singaporean companies to tap into the rapidly growing market in South Asia, Singapore’s Minister for Foreign Affairs Vivian Balakrishnan told reporters last month. “They know that although Singapore is very small, we have a disproportionate share of global semiconductor manufacturing capability, and they are carefully studying our system in terms of its ecosystem,” he said.

Modi’s government has set up a US$21 billion plan to beef up semiconductor capabilities across the country, with a total of US$15 billion worth of investment in chipmaking plants announced earlier this year. Singapore’s expertise in memory chips and matured logic processors, which are widely used in electronic devices and automobiles, could help India grow its chip industry at a faster pace.

  - Bloomberg