We are in the 4th industrial revolution and data is the new fuel of this revolution and the crucial component of the data is semiconductor or chip. The 21st century is depending on semiconductors.
Semiconductor is a foundation component for economic growth, Security, and technological innovation.
Equipment like smartphones, home-appliances, automobiles, defense system, nuclear power, aircraft and for many more depends upon semiconductors.
Latest technologies like IOT, AI, Quantum computing, Crypto currency all directly or indirectly depend on the demand of semiconductor.
Overwhelming dependence on several sectors makes it geopolitically very important. Let’s see the geo-political significance of the semiconductor industry.
- Worldwide per year 1 trillion chips produced which will around 130 chips per person
- Taiwan 15% GDP is depending on semiconductor
- Semiconductor industries receive highest R&D investment which is Globally 23%
Raw Material for Semiconductor
- Silicon – SiO2
Silicon, the principal ingredient in beach sand, is a natural semiconductor and the most abundant element on Earth except for oxygen.
- Gallium Arsenide (GaAs) Or Gallium Nitride (GaN)
China is the world Leader in Silicon (68%) and Gallium (97%) in production. Since 1990 the size of chips has drastically reduced from 180 Nm to 5 Nm so raw material for the chips is not an issue in the upcoming future.
Current Supply Chain Disruption
The Semiconductor industry remain highly vulnerable to geopolitical disruption as the supply chain is highly complex and globalized. The global rivalry on chip related interests is not new for the world, but the advent of Covid-19 pandemic has certainly intensified it. As work from home is new normal for most of the industries, classrooms shifted to digital mode, since everyone at home due to this entertainment industry boom all these factors increase the demand of gadgets like smartphones, tablets, PCs, Laptop etc.
As soon as lockdown lifted and demand for automobile industries increased due to all the factors semiconductors demand increased. Due to this sudden rise, supply crunch happens and it gives strength to the geopolitical tension. Due to the US-China Trade war it has already increased.
Opportunity for INDIA
- Due US-China trade war India has opportunity to grow in the industry
- Chip designing ideal place due to highly skilled workforce
- 3000 chips designed in India every year
- The Indian market for semiconductor design is increasing, India can take the advantage and can create a good space in the semiconductor industry.
- The Government of India is offering more than $1 billion for each company that sets up manufacturing units in the country
- The research report expects that mobile devices are expected to grow at a high CAGR of 33.4 per cent between 2013 and 2020. Consequently, the share of mobile devices in semiconductor revenue is expected to grow from 35.4 per cent in 2013 to 50.7 per cent in 2020.
Challenges for INDIA
- Natural resources
- Lack of infrastructure
- China and Vietnam which have been favorite destinations for global chip manufacturers due to better cost-efficiency
- huge cost, running in billions of dollars, manufacturing even a single chip requires hundreds of gallons of pure water, which may also be hard to find in India in the required quantities.
Let’s hope for the best since India has already taken Make in India initiatives and the Government is building the infrastructure also.