Semiconductors: the new 'weapons' of geopolitics are finding a strong relevance in Indian discourse.
What is a Semiconductor?
- Thumbnail sized 'building blocks' of almost every modern electronic device
- Give computational power to devices
Working of a Semiconductor
- Basic component: sliver (not silver) of silicon
- sliver etched with billions of microscopic transistors in a pattern to control current flow determined by computational instructions
Steps in Supply Chain
- Developing software for chips
- Patenting them via core IPR
- Making chip fabrication machines
- Setting up factories (aka fabs)
- ATMP (Assembly, Testing, Marking and Packaging)
Global Concentration
- Taiwan, S. Korea, and USA are biggest players
- 90% of 5nm chips by Taiwan Semiconductors Manufacturing Company (TSMC)
- Industry Valuation: $500-$600bn globally
Major global efforts to secure chip supply chain
Amidst Chinese position on Taiwan, major economies are forced to enter chip-making sector. What are major efforts?
- USA: $52.7bn government funds for chips + Science Act
- EY: €43bn for public and private investments
- India: $10bn PLI + fiscal support to Designed LI
Indian Scene
- By 2026, Indian demand expected: $70-$80 bn
- PLI: 50% fiscal support for all chips w/ special push to 45nm chips (less time consuming and economical in production)
- 2 plants in GJ (Vedanta and Foxconn)
- One each in TN and KA planned
Challenges
- Limited capital: $3-$7bn needed for 1 fab, total PLI is only $10bn
- Low funds for Research and Development
- Initial cost upfront on taxpayer
- 2-4 million gallons of ultrapure water needed per day per fab (on avg)
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