Chip design in China and India: Multinationals, industry structure and development outcomes in the integrated circuit industry

India and China have taken very different developmental paths in integrated circuit design. India has engaged with multinationals and emphasized design service. China has focused more on homegrown fabless firms designing their own chips. These two different routes have led to very different outcomes in terms of technical capabilities, value capture and patent creation. Paradoxically, India has greater technical capabilities than China, but has lower value capture and domestic control of patents.

► India has superior technical skills in integrated circuit (IC) design. ► Chinese firms have better value capture in terms of revenues and patents. ► India’s IC design is oriented to design service and MNC design subsidiaries. ► China’s IC design is oriented towards fabless design firms. ► MNC engagement co-evolved with each country’s industry.