Semiconductors function as an intermediary between conductors and insulators, showcasing conductivity that often falls directly in the middle of these two categories. Commonly used as integrated circuits and colloquially termed “chips,” semiconductors have become some of the most precise and minuscule products manufactured on a global level. They are often composed of elements like silicon or germanium, or compounds such as gallium arsenide and cadmium selenide.
The Importance and Use of Semiconductors
Semiconductors serve as the backbone of multiple electronic devices, from simple appliances to complex machinery used in various industries. For example, the automotive industry relies heavily on semiconductor chips in cars’ electronic components, with chips making up about 40% of the cost of a new internal combustion engine car. Thus, semiconductors not only support technological advancements but also contribute significantly to the economy.
The Ongoing Semiconductor Shortage
Recently, issues related to semiconductor supply have come to the forefront. Work-from-home transitions due to COVID-19 have drastically increased the demand for laptops and other similar equipment. This sudden surge, combined with unforeseen events such as natural disasters affecting production plants and unsound forecasting by automakers, has led to a worldwide scarcity of semiconductors.
The Impact of Semiconductor Shortage
The consequences of this semiconductor shortage are sweeping, impacting a range of industries. It is predicted that the lack of semiconductor chips will result in a loss of USD 210 billion in sales for car manufacturers alone. Furthermore, the shortage considerably disrupts the supply chain, impeding the production of several types of electronic equipment. Everyday items such as televisions and smartphones are becoming more expensive due to this widespread disruption.
Future Strategies for Semiconductor Production
As the use of emerging technologies like the Internet of Things, artificial intelligence, extended reality and blockchain increases, so does the demand for specialized semiconductors. To mitigate the ongoing crisis and prepare for future requirements, some nations like India are taking ambitious steps to establish local semiconductor manufacturing capabilities.
Under its ‘Make in India’ initiative, India is offering incentives, such as more than USD 1 billion in cash, to semiconductor companies willing to set up local manufacturing units. The strategy focuses on designating locally-made chips as “trusted sources,” which can be employed in a range of products, from CCTV cameras to 5G equipment.
This move aligns with global efforts to achieve self-sufficiency in semiconductor production, ensuring better control over data security and hindering any single country from monopolizing the semiconductor supply chain. Given their pivotal role in modern technology and industries, it won’t be surprising if semiconductors are soon classified as “critical infrastructure” in many countries.
