The People’s Republic of China has witnessed its largest decline in the manufacture of Integrated Circuit Chips. According to South China Morning Post, the production of semiconductor chips slumped since the arrival of the pandemic COVID-19 and weak demand. The business database platform Qichacha has stated that 3,470 chip-making companies “went out of business” in the first eight months of 2022. The local output of micro-computers has stalled from 18.6% to 317.5 billion in August. This has been a significant decline in the industry since 1997. The main entities in the Chinses Semi-Conductor Industry are Shanghai Microelectronics Equipment and China Electronics Technology Group.
The primary cause of the weakening demand is attributed to India and the United States which have begun a rapid spree of local production of semiconductor chips. The Indian government under the PLI (Production Linked Investment System) has planned to create separate semiconductor and display electronics systems. The Gujarat Government has entered into a partnership with Foxconn and Vedanta, aiming for an investment of 1.54 lakh crore for achieving self-reliance in the field of semiconductor manufacturing.
According to the Indian Electronics and Semiconductor Association (IESA), India’s semiconductor market is expected to attain 300 billion dollars in cumulative revenues by 2026. The “Make in India” will boost the local sourcing of semi-components shortly. The United States of America under the guidance of President Joe Biden has signed the Chips and Science Act that will provide 52 billion in semiconductor initiatives. The American government under this act will provide subsidies and additional tax credits to companies that manufacture chips in the US. This Act will also help India in the medium and long term. (Three to five years)
The semiconductor giant Intel has started the work on the 20-billion-dollar semiconductor plant in the American state of Ohio. Other companies such as Samsung have floated the idea of investing 200 billion dollars to build around eleven more chip plants in the United States. Semiconductors are materials that have a conductivity between conductors and insulators. Most of them are composed of Gallium, silicon, cadmium and Germanium. They function as the heart and brain of almost all semiconductor machinery and equipment.
They are essential for all sectors and fields of the economy such as Aerospace, communications and automobiles to name a few. It forms a vital component of ICT (information and Communication Technologies) and the larger part of Industry 4.0. The government of India launched India Semiconductor Mission in the previous year 2021 under the aegis of the Ministry of IT and Electronics. Numerous Semiconductor Fabs will be built as a part of this initiative. The Ministry will take the required steps for the modernisation and promotion of the Semi-Conductor-Laboratory. (SCL).