Good morning. With rising geopolitical tensions, more and more countries want technological sovereignty, control over the technologies that power the economies. We're talking AI, cloud, chips, the networks that connect them. But technological sovereignty does not mean self-sufficiency. That's more complex. It's also more expensive. So what capability is most important and how far can countries push for control before they start fragmenting the tech ecosystem in the world? Minister, let's start with India. You're investing $200 billion in semiconductors. How are you thinking about tech sovereignty? What's most important for you?
When we look at tech sovereignty, we have to look at it in a very mature, very complex way. We are thinking more of strategic dependencies. Strategic dependencies and resilience. Which are the products? Which are the segments in which we must have manufacturing, design and the complete product development capabilities within our country? Which are the parts of the value chain where we can depend upon other countries? See, technology is always a global value chain. We want to be deeply embedded in this global value chain and be able to add value to those parts of the value chain where we play the best role. For example, design in semiconductors today, 2 nanometer and 3 nanometer chips of practically every large company that you can think of — Qualcomm, Nvidia, AMD — they are all designed in India. Now moving forward in that value chain, fabrication, ATMP, getting the full product designed, that is a natural progression that we are moving towards. So when we talk of tech sovereignty, we are talking of critical and strategic dependencies, talking of resilience, and we are thinking of which are the parts of the global value chain where we need to be fully embedded.
And of course when we talk about tech sovereignty, I mean not many countries are actually there. The US, China, quite a few countries want to come on board, the likes of Korea, Japan, Germany. Where are they with that? I mean, how quickly can that happen?
Well, I think that depending on the country, there's different aspects of the tech stack that they can provide depending on where you are. And so I think as you look at this issue, it's really important to — there's an element of what country does it come from? But the reality is that the independent trust between a company and a country is what's ultimately going to decide how this plays out over time. And so in our case, as an example, we spend a lot of time — we've spent a lot of time here over the last 30 years investing in the communities, investing in education, investing in — we have, you know, a huge employee base here. And I think the — what I don't think that any country is going to be able to, from a standing start today, the pace at which AI is moving and everything else is moving, I don't think most countries aren't under the pretense that they can do it all, every bit of it, right.
I think it's very difficult because by the time you build a piece of technology that comes from our portfolio or someone else's portfolio, it's probably obsolete at the pace things are moving today. So what the minister said about the design of silicon and the leapfrogging of capabilities — I mean, he wasn't talking 15, 16 nanometers, he's talking two or three nanometers right off the bat. And that's what we design too. We design our own silicon, and I think the world needs more capacity in this space too. So the world would welcome a friend like India who has that capacity.
And of course India has the India stack. You've built that. It's evolving really quickly. What have been some of the challenges and what are some of the choke points that you're beginning to see?
We'll have to again look at what is the full spectrum which is available. If we talk of — if I continue what Chuck said — in the entire chip space, in the semiconductor space, if you look at the entire spectrum from 2 nanometers to 90 nanometers, there are certain segments, let's say from 28 nanometers to 90 nanometers, the legacy nodes what we call, there is huge concentration building up in that particular segment. And as Chuck said, a component which is coming from any particular country, every manufacturer should look at: can they trust? So trust is going to be a very important part of the global value chain. Now it's no longer just cost. Trust, because cyber security is becoming very important. So trust is going to be very important. Countries like India are placing — we are placing ourselves as a trusted partner for global value chain in whichever segment we want to play, whichever segment we are coming up, we want to be the trusted partner. So let's say 28 nanometers to 90 nanometers, the legacy nodes, a million-dollar machine can actually be — the production of a million-dollar machine can stop just by a $1 chip. So can we place ourselves as a country which is trusted both in design, in manufacturing, and in complete evaluation of the final product? That's how we look at it. So when Chuck says that yes, we are expanding our production in India, he knows that we have design capabilities. He knows that we are moving in the manufacturing capabilities. We are developing the entire ecosystem. And to your question of choke points, what's important is that we develop the ecosystem. Without ecosystem, no manufacturing effort will ever pay off. So for example, when we started the production of mobile phones, we started with assembly. Then we started manufacturing modules. Then last year onwards, we started manufacturing components. And today there are many components where 100% capacity required for our country, we are able to manufacture in India. We have started exporting components to other countries. So that is the cycle that we are looking at in a very methodical way. Step by step, move from the finished product to modules, to the components, to the materials, and to the capital equipment, the machines which go for it. Same approach we are following in semiconductors. Similar approach we are following in railway systems, in defense systems. It's a very methodical way we are moving forward.
Can you build resilience without causing inefficiencies, duplication?
Yeah, I think it's really important for companies to work very closely with government. So the minister and I know each other well and we've talked a lot about this, and I think that India is one of the few countries that has the scale to take on some of the things that he's describing. And I think when you talk about sovereignty, in many cases we talk about software assets, cloud-delivered software solutions, and that's a good example to address this question. When we began initial conversations — this started primarily in Europe, I'd say two to three years ago — it really began in earnest, and the early conversations were: we want everything that you deliver today, we want it on-prem, total control, we want that operated by citizens of this country. And so then you start whittling down a little bit from there, because the reality is that to deliver that technology on a country-by-country-by-country basis at that level of capability is going to be probably a non-starter from a cost perspective by the time you're finished. And so what we have done over the years is actually sat — we've sat with the governments and said, what is it you're trying to accomplish? Let's figure this out together. Instead of you giving us a feature list, let's talk about what are the things you're worried about? What are the things that you feel adamant about? And you know, the two big things that always come up, and then there's some other things that we have to deal with. The two big things are always data. We want to maintain our data, data sovereignty. We don't want it exiting the country. We don't want it out of our control. And we want operational control of these systems, right? We want to be able to — we want to know how they're operating. That doesn't mean you have to have every — like if it's an in-country cloud service, it doesn't necessarily mean it has to be run by local citizens. Maybe it is, maybe it isn't. But you need to understand enough to know that you have operational control. And in certain situations, you actually want to — you may want to tighten that system down where you limit the external communication outside the country under times of stress. And so you get into these discussions about what it is you're trying to truly accomplish. And I think we can deliver it. So we've created a portfolio of what we call sovereign critical infrastructure that we have launched in several countries in Europe over the last year. We just launched it in Canada, and we haven't really announced it publicly yet, but over the next few months we'll be bringing that to India as well.
I keep hearing trust and I keep hearing strategic alliances. Minister, I mean, I'm wondering how do you counter dependencies? We've seen how you can be dependent on someone now and then you be in a very vulnerable position later on. How are you looking at dependencies?
That's a very interesting point of view. Yes, things change, politics change, geopolitics play a big role. So we have to constantly calibrate our approach, and we in India are thinking at least 20 years ahead. We are looking at goals which are short-term goals of 3 to 5 years, mid-term goals of 5 to 15 years, and long-term goal of 20 to 25 years. That's the way we are thinking, and we are moving in a very, very, very methodical way because yes, you are right, there are times when friends will become foes. So it's very important to build, find out, figure out what's the most important thing which can make your production, make your economy vulnerable to somebody else's policies. So we think in that way and identify those things and start working on that.
How should countries look at partnerships, alliances?
Well, I think that to the minister's point, I mean, that you have to figure out who you trust, but build flexibility into your capability over time. So you —
Well, I think that it's that again — there's one aspect which is what country does this partner come from? That's maybe an important bit to start. But then it's how does the company that you're engaging with operate? I think that's equally important. How long have they been investing in my country? How long have they — how well do we know them? How well have they done what they've told us they were going to do over the years? You know that because as long as companies have been operating in India, there's always been a dialogue about things that the government would like to see companies do here. Obviously lots of hiring of resources, engineering resources, silicon design resources, things of that nature. That's one piece. Manufacturing is another piece. Education is another piece. And so you can look at the track record and know who has really been here and who is — and this is not unique to India, but we're talking about India — and who has really invested and done what they've said that they're going to do. And I think that's what you have to do. But then as you work through it, if I'm sitting in the minister's shoes, I also want to make sure that I work with someone that I trust, but I always provide myself optionality because that's the issue that I'm solving for.
What are you most concerned about as you build the India stack?
Materials, that's where the biggest dependencies are. That's where the biggest concentrations are. So materials are very important. The way most of the products in which we want to develop our capabilities today, the dependence on materials is extremely important. That's why in the semiconductor program that we have, in the first version we decided to have one marquee player, and let's say we have what, 12 projects out of which five are already in commercial production. In the second version of our program, we decided to focus a lot on materials — the chemicals, the gases, the substrate material, the other materials which go into manufacturing of semiconductors. All that part is very, very important because that ecosystem takes a lot of time and effort to build, and countries which have built it, they have taken 20 years, 25 years to develop those capabilities. Do we have that luxury of time? No, we don't have. So we have to put in that extra effort to get that capability in our country, both in terms of understanding of the materials, handling of the materials, manufacturing them, processing them, storing them, using them in the chips or every other manufacturing process, and making sure that we develop an ecosystem which becomes good for us, good for the world. I'll build upon one more point that Chuck was saying about the track record. Chuck, that you mentioned that there are countries who have developed a very good track record. I'll talk about that a bit. For 40 years we have had tech centers of every large global company working in India, designing new products, introducing new products based on designs in India. And for 40 years there hasn't been a single case of IP-related dispute. We have friends here. Kiti is present. I mean, we have absolutely no case of IP-related disputes. That's where trust matters. That's where a country's long track record matters a lot. So the companies who are working with us, when they see that track record, they feel very comfortable that politics or no politics, policy changes or no policy changes, there is a particular legal framework in a democratic country which they can trust, and that's what we think is most important. When you look at India, look at us as a country which can be trusted, which has a very strong track record of being trusted.
Chuck, how is your business adapting as more countries want control over their technologies?
First of all, a comment on what the minister just said. I think we came in here talking about the trust that's required from the companies, but I do want to reiterate the point that India has been an incredible trusted partner for lots of American companies in particular, and global companies, to his point. And I think that it really does create an environment where we're comfortable investing, and I think that's super important because it allows us to do what I'm — how I'm going to answer your question. And it gives us confidence to invest, to deliver those solutions that otherwise we wouldn't be building if they weren't being requested by the countries.
And you have what, $2 billion in the country?
Our country leaders in the room. All I'll say is it's much less than what it should be. And but your question of how do we manage so many countries asking us to do this? You know, in the case of Europe as an example, we've been trying to encourage, as have other tech companies, to come together as European Union and let's have a single set of requirements and try to make this so that we can scale it. India has scale. So it just naturally has scale because of the size. But I think the good news for us is that a lot of our portfolio, we have maintained sort of versions of it that you can run on your on-premise infrastructure or versions that you can consume from the cloud. That's not true of everything we build. We have built some technology that's just natively cloud available. But in that case, perhaps you can put a cloud instance in the country that's dedicated to the country if there's enough size. But we were fortunate that we have this mixed portfolio. So it's incremental dollars that we're spending on it that we wouldn't be spending — that we would be spending somewhere else. But the reality is that's where the world's going. So you don't have to love it, but you have to just understand that if you're going to participate in these growth markets around the world, you're going to have to figure out how to work with the governments in those countries to deliver the solutions in a way that they want to consume them. And if you can't, they're going to find an alternative where they can, or in India's case, they may build it themselves anyway.
I want to touch on R&D funding because that's one of the things that will dictate whether or not you succeed in your plan, and some point to the R&D funding gap for India. Currently you stand about 0.6% of GDP versus the US at 3.5%, and you have countries like China, Korea, Israel much higher than that. Might that be a hindrance to you?
Definitely, definitely we need to amp up our R&D spending. We also need to change the structure of how R&D is done. We need to really focus on which are the application-related research, applied research, let's say the areas in which we need to put more money and the areas in which we need more focus and energy, and it has worked really well. I'll give you one example. We wanted to develop the 4G telecom stack which can be then upgraded to 5G telecom stack because in the world there are two from China, one from South Korea and two from Europe. There is no sixth telecom stack, and end-to-end, I'm saying complete — the core, the base, and the entire thing, the radio network, entire thing. We decided to put in efforts both with the private sector as well as the government combined in a very nice partnership. We could develop the entire 4G telecom stack end-to-end, built from scratch, within three and a half years. And today it is deployed on more than 100,000 towers, working fantastically well. So that's now a new entrant in the world where the world was dominated by five players. Today there's a sixth player which is much better in capabilities, significantly better in capabilities, and significantly lower on cost. So that kind of capabilities are available in our countries. The question is focusing on which are the applications, which are the segments in which we need to put our efforts on, and we have been very carefully putting our limited capital into areas where we can get the best results. And again, that draws from the strategic picture: which are the segments in which we want to be fully self-sufficient and we want to be able to give a trusted solution to the world. That's the way we look at it.
Can I comment on that? Because in this case we actually came aside, came beside the country in this building out of this 4G infrastructure that actually enabled mobile broadband out to all areas of the country. And in that case the development was happening on that piece, but we then integrated it with our portfolio. So you get the leverage of some of our R&D spend as well in addition to that, because the total 4G, 5G networks — the piece that the minister was talking about being developed plus all of this connectivity, security, etc., all the way out to the edge. So it's a multiplier, is my point. So the lower number isn't always indicative of the value that you're getting out of some of that R&D spend.
It is a long game, right Chuck?
