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Semiconductor Industry of Bharat and Its Repercussions over Global Politics

Niranjan Bhombe

Soham Athavale

17 January 2023

"In the 21st century we came across a term “Industry 4.0” or 4th Industrial Revolution. It is mainly driven...." automation. In each century we faced an industrial revolution, 1st Industrial Revolution in 18th century when steam engine was made. The next Industrial Revolution 2.0 was witnessed in 19th century with the vast use age of oil and electricity powered machines. We witnessed 3rd Industrial revolution in 20th century with digitalization of machines. Where computers came into picture. And now at the beginning of 21st we are witnessing 4th Industrial Revolution.  It is mainly automation, Internet of things, machine to machine communication etc. And the backbone of this is the semiconductor chips. Chips make an appliance efficient and handy. In today’s scenario chips are present in all the appliances around us. Making it another important commodity after oil.

In semiconductor chip industry the process is separated into 3 phases; Designing, Manufacturing and Assembly. At present United States has 50% share in designing phase. Top companies like Intel, NVidia, Broadcom and Texas Instruments are leading companies in chip designing. Apart from these fifth largest company is Samsung. This field needs highly skilled and experienced labour. The next phase is of manufacturing. Currently Taiwan, China, Vietnam, Indonesia and Philippines dominate this sector. It needs less skilled labourers. The third and last phase is of assembly. Here Bharat comes into picture. After 2013 many companies like Foxcon, Solex Energy, and Bharat Electronics etc. entered in chip assembly field.

During the pandemic chip industry observed a huge shortage. It was due to ramming down of supply chains and lockdowns throughout the word. Some prime reasons were the concentration of these industries in Taiwan and China. Post pandemic China had a very fragile situation. Zero covid policy forces Chinese industries operate for only 3 days in a week. They faced coal shortage leading to power failures. Moreover there was a news a nuclear radiation leakage and contamination on its west coast. These all led to smashing down of Chinese government at global forums due to pollution. Banning of Chinese companies in United States during Trump era and forcing US companies to take their manufacturing lines out China added further to this. The last nail in the coffin was public riots in China against the Chinese dictatorship. Talking of Taiwan; artificial war like conditions and constant threatening by China led to very unstable situation.

All these incidents collectively opened a huge opportunity for Bharat. In 2020 New Delhi knowing this declared a 10,000 Crore PLI (Production Linked Incentives) Scheme for Chip manufacturing and Electronics manufacturing industries. Bharat wants to push itself as a major player in designing and manufacturing sector. In 2021 ISMC Karnataka was formed. A joint venture between UAE’s Next Orbit Ventures and Israel’s Tower Semiconductor. It is being established in Karnataka. Following this Vedanta Foxcon joint venture was announced to be setup in Gujarat. Following this Bharat’s own Tata group is all set to roll out a chip manufacturing unit. Moreover New Delhi has promised to roll out 60000 graduates for semiconductor designing and manufacturing.

On a larger view we can see that Bharat can be a fast emerging Semiconductor hub. It has cheap skilled labour, Government support plus a very diverse and huge market. A Chip industry needs a continuous ultra-pure water supply. It needs uninterrupted electric supply and a very clean dust free environment. Bharat has a view of developing Semiconductor corridors in near future. Uttar Pradesh seems to be at the forefront in this. It has already announced Electronics Manufacturing Policy in 2020. Under this industries will be given special tax relieves and a favorable atmosphere for their industrial needs.

Now let us look upon its repercussions over global politics. There is no doubt that Bharat is a booming economy and semiconductor business with take it to newer heights. Domestic industries of Bharat will no longer face shortage of chips or late deliveries cutting down the manufacturing costs of finished goods. More industries can be attracted to set their manufacturing units in Bharat. As we have seen in 1990s that the one who controls oil controls the world, same can be said in case of semiconductor business. The demand for skill labour will rise leading to up skilling of the population. Bharat will be a leading player in science and technology and truly a semiconductor superpower.

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