India Adds $13.3B to Chip Incentives as Malaysia Pushes Up the Value Chain

Two governments, two different bets on the same industry. India's new money expands a $10 billion chip incentive program launched in 2021, according to TechCrunch, and more of it goes to chip equipment, materials, design and research. The Mobile Phone Manufacturing Scheme runs five years, from now through March 2031. It pays out 2.25% to 5% of eligible smartphone sales, plus an extra 1.5% for components and sub-assemblies sourced in India.

Over that period the government expects mobile-phone production of about ₹39 trillion, roughly $405 billion, and around 60,000 direct jobs.

That is an assembly-first playbook, and India is honest about where it stands. China accounted for 63% of global smartphone production in 2025 against India's 18%, Counterpoint Research told TechCrunch. Navkendar Singh, associate vice president at IDC, described the shift as moving from "assemble more" toward "depth, R&D and local value capture."

Malaysia stays in its lane

Malaysia is working the opposite end of the same problem. Its second finance minister, Amir Hamzah Azizan, told CNBC's Karen Tso at the IMF spring meetings in Washington that the semiconductor space is in an upcycle and Malaysia will be a beneficiary.

"I think the reality of it all is, there is enough growth that will go around," he said. Malaysia does not see China, its largest trading partner, as a rival in the sector.

The country holds 13% of the global market for chip packaging, assembly and testing services, according to a February report from the Malaysian Investment Development Authority cited by CNBC. That is back-end work, and the government wants to move up the value chain. Amir Hamzah framed the strategy bluntly: Malaysia will not go "head on to the tail end of the high-end competition, where maybe the U.S. is bringing all the parts."

Both countries are positioning themselves around a supply chain that has been reorganising for years. US-China trade tensions pushed companies to diversify operations, and the minister said end users are now doing exactly that. Malaysia's pitch is connectivity and scale rather than leading-edge logic.

The capacity question nobody answers quickly

New fabs take years and enormous sums to build, and the inputs are not trivial either. Tom's Hardware reported in October 2024 that Hurricane Helene had cut off Spruce Pine, North Carolina, home to the only ultra-pure quartz mines in the world, with more than two feet of rain and no road access. Two companies mine there: Sibelco North America and The Quartz Corp.

Brian Potter, writing on Construction Physics, argued the dependency is real but overstated. Quartz crucibles are needed for most semiconductor manufacturing, and Spruce Pine supplies most of the quartz, but alternatives exist that are, in his words, not yet developed, not quite as good, and not quite as cheap. Cutting the supply would not stop chips entirely. It would cut yields and raise costs.

That is the less dramatic version of capacity expansion. Governments can commit billions and set targets, but the constraints sit in mines, crucibles and crucible lifespans of roughly 400 hours. India's $13.3 billion addresses the top of that stack. The bottom of it has not moved.