Excellent study material for all civil services aspirants - begin learning - Kar ke dikhayenge!
SHARE:
SEMICONDUCTOR PROBLEM 2021
Read more on - Polity | Economy | Schemes | S&T | Environment
- A raging trouble: Most know about the chip shortages that is affecting many industries, particularly automobiles because these days chips are at the heart of everything. But that is not the reason for the current chip wars taking place. The chip war is primarily between the US and China and its ramifications are being felt in Taiwan, South Korea, Japan, the EU and others.
- Crux of the matter: At the heart of this war is the goal of securing the latest generation and most powerful chips and denying these to your rival. The US, since 2018, has systematically moved to deny China access to latest chips and chip technologies via a number of sanctions.
- Better chips an advantage: The reason for this is simple. Newer and more powerful chips give a big advantage in a host of industries such as Artificial Intelligence, Cryptocurrency Mining, 5G, NFTs etc., and the US would like to keep China behind it in these areas, particularly in AI.
- Designing versus fabricating: The chip industry is divided into players who both design and fabricate chips like Intel, those who only do design but no fabrication such as Nvidia and Qualcomm, and those who are pure fabrication players like TSMC of Taiwan.
- American edge: The US, while still the leader in chip design and fabrication, has become too dependent on outside fabrication facilities like TSMC and others to supply the full requirement of chips. It is now spending billions to bring more Fabs inhouse.
- Make new fabs: New fabs are being built by Intel, TSMC and others in Arizona, which is becoming a big chip design and fab hub. Taiwan and South Korea supply a lot of the latest as well as older generation of chips to the world, and it is critical for both the US and China because the companies in these two countries depend massively on Taiwan's TSMC and South Korea's Samsung or SK Hynix.
- Powerful ones: Taiwan, South Korea and the US have the lead when it comes to Fabrication facilities for the newest and most powerful chips. Older generation of chips are manufactured in many countries. China has fallen behind to these countries though it has many older gen chip firms.
- Sanctions: US sanctions on Huawei, SMIC and China in general is aimed at preventing the country from accessing the latest designs and also using Taiwan or South Korea to supply them.
- China and Taiwan: At least some of the sabre rattling of China to make Taiwan accept its suzerainty is because of its need to control or access the sophisticated chip fabs in Taiwan. TSMC of Taiwan is scrambling to build facilities outside of Taiwan to protect itself -- it is building a new plant in Arizona and looking at another in Japan.
- Japan’s situation: Japan at one point had a significant number of chip fab plants but now these are considered old generation and it is trying to attract players from other countries to set up fabs in Japan.
- China will take time: China is spending billions to catch up in terms of both design and fab facilities so that it achieves parity or is better than the US. But it is between 5-10 years behind the US currently in chip fab, and even in chip design though it is now spending billions to rectify that.
- The big problem China faces is that there is only one firm -- ASML of Netherlands -- that makes the complex and sophisticated machines that are necessary to set up the latest generation of chip fabs. And the US has moved to prevent China from getting these machines from ASML.
- Both Japan and EU are now taking steps to build chip fabs within their borders because the chip wars could get ugly. Chips are likely to become more expensive as manufacturing them in US, Japan or EU is more expensive than doing so in Taiwan.
- Indian situation: India has been tardy in securing its future in chips, though it has offered incentives to companies ready to set up fab facilities in the country. Fab facilities require billions in investment, power supply and clean water and India is not a great place in the latter two.
- What can be done: The options for India are to take stakes in some chip fab facilities outside of Taiwan if possible or enter into long term contracts. There is a feeling that India might be able to design good chips, but Fab will always be a problem.
* Content sourced from free internet sources (publications, PIB site, international sites, etc.). Take your own subscriptions. Copyrights acknowledged.
COMMENTS