Last week, the UK became the latest country to announce a national semiconductor plan. The UK’s national semiconductor strategy plans to double down on advanced chip leadership and research and development (R&D) and facilitate greater international co-operation, particularly in ‘buddy-noise’ initiatives with Japan. Meanwhile, Tokyo has announced a major plan to reassert its strength in advanced semiconductor manufacturing with seven chip makers including TSMC, Samsung, Micron and Intel. One of those initiatives with Micron envisages a plant in Hiroshima to produce state-of-the-art extreme ultraviolet (EUV) lithography technology.
Bipartisan support in the US legislature resulted in the creation of the CHIPS and SCIENCE Act of 2022, which aims to boost US semiconductor R&D as well as production. The act encourages major US chip-design firms such as Qualcomm to manufacture their chips in the US. It established a coordinated permitting system balancing environmental, commercial and tax considerations, supported by federal subsidies and guarantees. Like the US Moon Project in the 1960s, the Act raised huge challenges for building the first “zetascale” supercomputer, which would operate up to 1,000 times faster than the fastest supercomputers available today. The CHIPS Act provides $53 billion, of which $39 billion is for manufacturing and R&D and $13 billion for workforce development.
Concerned with accelerated development, the European Union has announced a draft Chips Act that seeks to create a state-of-the-art European chip ecosystem for R&D, design, manufacturing, packaging and testing. A major advantage of Europe is that the world’s leading photo-lithographic company, ASML, which uses EUV technology to manufacture the super complex machines that are fundamental to the mass production of chips, is based in Amsterdam and Listed on Euronext (as well as). Nasdaq).
The India Semiconductor Mission (ISM) aims to build a vibrant semiconductor and display ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design. India’s Production Linked Incentive Scheme (PLI) has catalysed a faster pace of assembly of some high-end mobile phones. Much progress remains to be made in parts earlier in the R&D, design and manufacturing phases, and in expansion to the assembly line for servers, telecom boards and laptops.
The flurry of activity and the urgency of the efforts is being generated, of course, by the extreme uncertainty surrounding China’s actions on Taiwan, which is home to TSMC, maker of a significant majority of the world’s most advanced computer chips. TSMC is already building a facility in Arizona, US, and is under pressure to build in Europe, Singapore and the Chinese mainland as well.
Paradoxically, as TSMC builds outside its home base in Taiwan, it risks eroding the country’s ‘silicon shield’, increasing the likelihood of Chinese action. China has also accelerated its semiconductor strategy by focusing its $143 billion five-year plan on advanced manufacturing at some companies such as SMIC and Huawei.
The euphemistic term “de-risking” has been chosen in place of “decoupling” at the recently concluded G-7 meeting in Hiroshima, Japan. The G-7 consisted of India, Indonesia, Vietnam, Brazil and the small island of Comoros. How countries on either side of the technological divide will strike a balance between geopolitical considerations and economic interests is unclear. While the US appears to be on a collision course with China, Japan, the European Union and South Korea seek to walk a fine line between the two views. The sweet balance the world had achieved over the last four decades in the semiconductor sector is undergoing drastic changes.
in an epic book called Chip War: The Fight for the World’s Most Critical TechnologyIn , Chris Miller traces the history of the semiconductor industry and the deep connections between its origins in America and its evolution into a global supply chain that is now under threat. Korea produces 44% of all memory chips and 8% of all processor chips, Japan produces 17% of all chips, China produces 15% of chips (though currently low end) and Taiwan produces 41% of all processor chips. produces % and 90%. Most advanced chips. This geographic concentration around the South China Sea is far from ideal for a world that is on the verge of ‘falling apart’.
This is not a ‘war’ that India can swing on either side. Also, given the degree of hold required and the huge amount of capital required to build, India faces a very challenging road ahead in this sector. Vedanta and Foxconn have announced a partnership to build a chip manufacturing plant (or ‘fab’). This fab aims to produce 40 nanometer (nm) and 28 nm chips. While such chips are still in wide use today, the cutting edge of the technology at TSMC or Samsung is 2-3nm. TSMC first produced 28nm chips in 2011. Despite significant challenges in manufacturing, India’s prospects in packaging, assembly and design are much better, as lead times are shorter and capital requirements are lower. This is where India should focus on its promotion and workforce development.
PS: “In a world that combines the twin threats of nuclear weapons and artificial intelligence, America and China represent the greatest threats to peace,” said 100-year-old American diplomat Henry Kissinger.
Narayan Ramachandran is the chairman of Include Labs. Read Narayan’s Mint columns at www.livemint.com/avisiblehand
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