Significance of Semiconductor Chips

Significance of Semiconductor Chips

Significance of Semiconductor Chips


  • The semiconductor chips are becoming vital part of the world and is bound to shape the lives of people around the world.
  • Critical sectors such as defence, telecom, electronics and mobility are hugely impacted by the chip shortage.
  • Every message we send, every picture we take, every call we make depends on one chip or the other.


  • Manufacturing of Semiconductor Chips is not so easy as manufacturing any other product, this is evident in the fact that trillion-dollar company like Apple is not able to manufacture its own chips. 
  • The manufacturing of Semiconductor Chips have been concentrated in a few geographic regions including Taiwan, South Korea, the U.S., Japan, the Netherlands, and China.
  • Taiwan Semiconductor Manufacturing Company (TSMC) fab is perhaps the world’s most expensive and valuable factory.

What can be learnt from the ongoing Ukraine Crisis?

  • It is evident that Russia is struggling to control the conflict in Ukraine, in part because it is relying more on force than strategy.
  • Ukraine just acquired precision-guided missiles from its partners in the West, which it is employing to combat Russia. Chips are used to power these missiles.
  • Despite having certain precision-guided missiles, Russia is unable to produce them at the necessary scale due to Western economic sanctions.
  • Ukraine and American authorities claim that whatever Russia possesses is a mix of chips that were stolen, domestically produced, and imported in the past.
  • The well-known Entity List maintained by the U.S. government prevents China and Russia from obtaining this technology and gaining an advantage in the chip race.

What are the countries doing?

  • The U.S., European Union, Japan, India and China have invested in about $200 billion into the semiconductors sector, but the impact of that will not be seen immediately.
  • At the current scenario countries such as Taiwan and South Korea are leading in this sector.

Way Forward:

  • Indian States that are striving to attract investors for chip production must also keep in mind that setting up a chip unit requires consistent electricity and billions of gallons of clean water, neither of which any of them can now provide.
  • Even if it operates all year long, a semiconductor manufacturing factory costs $15 billion to $20 billion and takes years to break even.

Source The Hindu