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The Hindu Editorial Analysis- 10th October 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

The Hindu Editorial Analysis- 10th October 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC

The fate of chips will determine the fate of nations 


Context


Today’s most advanced chips are about half the size of the novel coronavirus in diameter and are shrinking rapidly. The fate of nations depends on this infnitesimally small piece of silicon, which can devastate and shape our lives in myriad ways.

About Semiconductors:


  • Semiconductors are materials which have a conductivity between conductors (generally metals) and nonconductors or insulators (such as most ceramics). Semiconductors can be pure elements, such as silicon or germanium, or compounds such as gallium arsenide or cadmium selenide.
  • Conductivity is the measure of the ease at which an electric charge or heat can pass through a material.
  • They are also known as integrated circuits or more commonly just chips, they may be the tiniest yet most exacting product ever manufactured on a global scale. 
  •  It's an electric circuit with many components such as transistors and wiring formed on a semiconductor wafer. An electronic device comprising numerous of these components is called Integrated Circuit (IC), and can be found in electronic devices such as computers, smartphones, appliances, gaming hardware and medical equipment.
  • These devices find  widespread use in almost all industries, especially in the automobile industry.
  • Electronic parts and components today account for 40% of the cost of a new internal combustion engine car, up from less than 20% two decades ago.
  • Semiconductor Chips account for a bulk of this increase.

Significance of Semiconductor Chips:


  • They are the basic building blocks that serve as the heart and brain of all modern electronics and information and communications technology products.
  • These chips are now an integral part of contemporary automobiles, household gadgets and essential medical devices such as ECG machines.

Recent Increase in Demand:


  • The Covid-19 pandemic-driven push to take sizable parts of daily economic and essential activity online, or at least digitally enable them, has highlighted the centrality of the chip-powered computers and smartphones in people’s lives.
  • The pandemic and the subsequent lockdowns across the world also forced shut crucial chip-making facilities in countries including Japan, South Korea, China and the US.
  • Its shortage causes cascading effects, given that the first one creates pent-up demand that becomes the cause for the follow-up famine.

India’s Semiconductor Demand and Related Initiatives:


  • India currently imports all chips and the market is estimated to touch $100 billion by 2025 from $24 billion now.
  • The Union Cabinet has recently allocated an amount of ₹76,000 crore for supporting the development of a ‘semiconductors and display manufacturing ecosystem’.
  • India has also launched the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) under which a budget outlay of Rs 3,285 crore is spread over a period of eight years for manufacturing of electronics components and semiconductors.

Challenges ahead:


  • High Investments Required.
  • Minimal Fiscal Support from Government.
  • Lack of Fab Capacities.
  • Insufficient Grants under PLI Scheme.
  • Resource Inefficient Sector.

Impact:


  • Countless industries have been affected as global demand for semiconductor chips continues to outstrip supply.
  • Chip shortages are expected to wipe out USD 210 billion of sales for carmakers this year, with production of 7.7 million vehicles lost.
  • The semiconductor shortage will severely disrupt the supply chain and will constrain the production of many electronic equipment types.
  • The chip shortage directly impacts consumers as prices of everyday appliances and electronic goods — from TV to smartphones — have increased due to the global supply chain disruption.

Way Forward


  • Emerging technologies, especially, Internet of Things, artificial intelligence, augmented and extended reality and blockchain are gaining prominence across industries. With these applications gaining traction across sectors, the need for specialised sensors, integrated circuits, improved memory, and enhanced processors is increasing.
  • India is finalising plans to manufacture semiconductor chips in a big way, as a part of its ‘Make in India’ initiative. The nation is offering more than USD 1 billion in cash to each semiconductor company that sets up manufacturing units in the country.
  • Chips made locally will be designated as “trusted sources” and can be used in products ranging from CCTV cameras to 5G equipment.
  • In December 2021, India invited an “expression of interest” from chipmakers for setting up fabrication units in the country or for the acquisition of such manufacturing units.
  • This is all being done to achieve self-sufficiency in the manufacturing of semiconductors, to ensure better control over data security and prevent countries in the world from being held to ransom by specific members of the existing semiconductor supply chain.
  • It is clear that semiconductors are changing the game in our modern, fast-moving world. Therefore India should give semiconductors the status of “critical infrastructure'' in most countries, in the near future.
The document The Hindu Editorial Analysis- 10th October 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC is a part of the UPSC Course Current Affairs & Hindu Analysis: Daily, Weekly & Monthly.
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FAQs on The Hindu Editorial Analysis- 10th October 2022 - Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC

1. What is the significance of chips in determining the fate of nations?
Ans. Chips, which are microchips or integrated circuits, play a crucial role in various sectors such as technology, defense, healthcare, and communication. Their importance lies in their use in electronic devices, including smartphones, computers, and vehicles. A nation's ability to produce and secure a steady supply of chips can significantly impact its economic competitiveness, national security, and technological advancements.
2. How does the fate of nations depend on the production and supply of chips?
Ans. The production and supply of chips are essential for nations in multiple ways. Firstly, chips are the building blocks of modern technology, and their availability is crucial for innovation and development in various industries. Secondly, nations heavily rely on chips for defense systems, including advanced weaponry and communication networks. Additionally, chips are crucial for the functioning of critical infrastructure, such as power grids and transportation systems. A weak or disrupted supply of chips can lead to economic setbacks, national security vulnerabilities, and hindered technological progress.
3. What are the challenges faced by nations in ensuring a steady supply of chips?
Ans. Nations face several challenges in maintaining a steady supply of chips. One significant challenge is the increasing demand for chips, driven by the rapid growth of technology and the Internet of Things (IoT). This demand often surpasses the supply capacity of chip manufacturers, leading to shortages. Additionally, the concentration of chip production in a few countries, such as Taiwan and South Korea, creates geopolitical dependencies and vulnerabilities. Furthermore, the complexity involved in chip manufacturing and the high capital investments required make it difficult for nations to establish their chip fabrication facilities.
4. How can nations mitigate the risks associated with chip supply chain vulnerabilities?
Ans. Nations can adopt various strategies to mitigate the risks associated with chip supply chain vulnerabilities. Firstly, diversifying the sources of chip supply by encouraging domestic chip fabrication facilities or partnerships with multiple countries can reduce dependence on a single region. Secondly, investing in research and development to enhance chip production capabilities and technologies can increase self-sufficiency. Thirdly, promoting collaborations between academia, industry, and government can facilitate knowledge exchange and foster innovation in chip manufacturing. Lastly, strengthening cybersecurity measures and regulatory frameworks can protect the chip supply chain from potential threats and disruptions.
5. What are the potential consequences for nations that do not prioritize the production and supply of chips?
Ans. Nations that do not prioritize the production and supply of chips may face several consequences. Firstly, they may become heavily reliant on imports, making them vulnerable to geopolitical tensions, trade restrictions, or supply chain disruptions. Secondly, a lack of investment in chip manufacturing capabilities can hinder technological advancements and innovation, impacting economic growth and competitiveness. Thirdly, national security risks may arise if essential defense systems and critical infrastructure heavily depend on foreign chip supplies. Therefore, prioritizing the production and supply of chips is crucial for nations to ensure their economic prosperity, national security, and technological advancements.
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