SEMICON DIPLOMACY

1.Context

 There cannot be a better example of peacetime global cooperation than the resolve involved in making the meticulous chip

Semiconductor Chips are made by a Japanese engineer working on Dutch machinery in an American foundry in Taiwan to produce wafers which were shipped to Malaysia for packaging before being sent to India as a finished product.

2. About

Semiconductor chips are the lifeblood of the modern information age. They enable electronic products to compute and control actions that simplify our lives

A semiconductor is a material product usually comprised of silicon, which conducts electricity more than an insulator, such as glass, but less than a pure conductor, such as copper or aluminium. Their conductivity and other properties can be altered with the introduction of impurities, called doping, to meet the specific needs of the electronic component in which it resides.

Also known as semis, or chips, semiconductors can be found in thousands of products such as computers, smartphones, appliances, gaming hardware, and medical equipment

3. Semiconductor Manufacturing

Nearly all leading edge (sub 10nm) semiconductors manufacturing capacity is limited to Taiwan and South Korea, with nearly 92 percent located in the former. Further, 75 percent of the semiconductor manufacturing capacity is concentrated in East Asia and China

4.Supply Chain Issues

Companies are looking to diversify their supply chain and for alternatives to their bases in China.

 The chip shortages due to Covid-19 have hit automakers with a revenue loss of $110 bn in 2021.

 The Russia-Ukraine conflict and its implications for raw material supplies for the semiconductor value chain have also poised chipmakers to invest in strengthening the Semicon supply chain.

India must seize this opportunity and become an attractive alternative destination for semiconductor manufacturing

5.The implication of self-sufficiency in Semiconductor

• Implications for national security as they are used in communication, power transmission, etc.
• The establishment of the value chain for semiconductors would ensure a multiplier effect on the entire economy. Further, since electronics items form one of the most imported items after oil and petroleum products, domestic production would be saving forex and reducing the balance of payments, especially vis a vis China

6.Semicon Diplomacy

5.1.QUAD

Australia, being rich in raw materials required for semiconductors, can be an important supplier to fill in India’s deficits. The US and Japan can be leveraged for capacity building and their advanced semiconductor technology in logic and memory segments.

 5.2.India’s Act East Policy

Semicon diplomacy is pivotal to India’s Act East Policy, which aims to build resilient ties in the Asia Pacific region. Considering that the semiconductor manufacturing and testing bases are heavily concentrated in East Asia, the Act East policy provides an opportunity to connect and strengthen ties with key players in the region

Frequent technological exchanges between a regional bloc like ASEAN via tracks in forums like the East Asia Summit and the ASEAN regional forum will be beneficial

6.India‘s Semicon Program Initiative

Considering that the global semiconductor market is projected to be $1.2 tn by 2030, India needs to be well-positioned to capture it. The recently announced Semicon India program which provides $10 bn fiscal support and other non-fiscal measures shows strong political  will

India needs to harness its strengths, such as the strong presence of global EMS players, diaspora, world-class design ecosystem, and demographic dividend, and use it as a pedestal for global partnerships and outreach.