Semiconductors: Why India Should Not Make Chips
The Times of India Delhi|October 12, 2021
Instead, the focus should be on other parts of the global value chain
Ajay Srivastava
Semiconductors: Why India Should Not Make Chips

The global supply crisis in semiconductors has led many to suggest India should create chip fabrication facilities (fabs). But the politics and economics of semiconductors are far too complex for such a solution to be feasible.

Why is there a global chip fight?

Chips are to this century what oil was to the last. No wonder there is intense rivalry among countries. The US and China are at the two ends of the chip universe.

The US controls IP, design and technology. Japan makes silicon wafers on which chip circuitry is etched. The Netherlands produces lithography machines that etch circuitry onto wafers. Taiwan Semiconductor Manufacturing Company (TSMC) has the biggest and most sophisticated fabs that make chips on order for anyone. South Korea, led by Samsung, also has advanced fabs.

On the other end is China, the largest chip buyer, consuming 60% of all chips produced globally. Its annual chip import bill exceeds $300 billion. China’s plan to develop a local semiconductor industry has alarmed the US.

In the last two decades, China succeeded in making low-end chips, not a mean feat. But it failed to make advanced chips. To acquire such technology, around 2015, it tried buying firms in the US, Europe and Asia. But alert host governments blocked all such efforts.

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