Semiconductors: An Omnipresent yet Pivotal Raw Material for Every Industry

Abhishek Kumar Singh
Abhishek Kumar Singh Dec 17 2021 - 5 min read
Semiconductors: An Omnipresent yet Pivotal Raw Material for Every Industry
Once you understand what a semiconductor can do, it is easier to imagine how different parts of our high-tech world benefit from them

If you ever broke your phone or computer, you might have seen a green coloured chip have billions of electrical components on it. This tiny circuit board is known as a semiconductor chip and functions as the brain of the device.

In recent days, semiconductors are in the headlines due to some reasons, and even the government of India took several steps to solve the problems related to it. Here, we will try to figure out why semiconductors are important and which industries are affected due to their shortage.

What is a Semiconductor?

You might be wondering why it is called a semiconductor. It is because a semiconductor consists of a type of material that has an electrical resistance in between a metal's resistance and an insulator's resistance, so it semi-conducts electricity. Further, we can control the flow of electrons in them, which makes them a useful material to be used in electronic circuits.

In addition to their special properties, semiconductors have other uses too.  Several semiconductors are used in a solar cell, which is sensitive to light. Solar cells generate electrical current depending on the amount of light hitting the semiconductors.

Why is it Important for India?

Once you understand what a semiconductor can do, it is easier to imagine how different parts of our high-tech world benefit from them. The semiconductor acts as the base of all electrical devices. Microprocessors, memory, and graphics processors (GPUs) are the most common types of semiconductors. Their job is to keep the machine running smoothly, such as by protecting the battery and whole system from burning up while performing heavy tasks.

Now, the main problem related to semiconductors in India is, we are not manufacturing them as needed. Most of our semiconductor demand is met through imports. As per reports, we imported semiconductors and allied products worth almost USD 24 billion and the numbers will go up to $100 billion by 2025.

Why is this in Shortage?

Strong demand—being the core component of all the tech-based industries, there is a robust demand for semiconductors. From automobiles to smartphones, banking to health, almost every sector is trying to match shoulders with the technology and demands of these semiconductors are increasing.

Monopoly —an important thing here is a market monopoly. Globally, only two companies make semiconductors chips; one is Taiwan’s TSMC and the other is South Korea’s Samsung. These companies fulfil almost 70 per cent of global demand.

The complex manufacturing process —the manufacturing process and raw materials needed for the semiconductors are very rare. A process called doping in which pure elements are mixed with small amounts of impurities makes semiconductors. The proportion in which these pure elements and impurities are mixed is also an important thing and companies never share them.

High initial investment— manufacturing units of semiconductors takes many big investments and poses high risks. An average manufacturing unit requires a huge investment of US$10-12 billion.  The situation turns worse as it takes more than three years to be production-ready and yet there is no surety of whether the quality will match and beat the competitors.

Which Industries use Semiconductors?

Banking—Banks are one of the major investors when it comes to semiconductors. They need them for online communication, digital accounting, cloud platforms, and numerous other uses. Additionally, semiconductors are used in ATMs, security cameras, and even automated locking mechanisms. Semiconductor chips help banks even more as AI and machine learning is coming and evolving within banking.

Health— Semiconductors have their uses in the medical field also. They are used while performing complex and risky surgeries. Monitors and pacemakers are some other popular examples of the same.  It would be impossible for this equipment to function without semiconductor chips, which control the power, sensors, temperatures, pressures, calculations, and many other functions.

Automobiles— in the automobile sector, they both improve and safeguard our quality of life. Bigger devices like cars, trains, and planes use semiconductors. Whether it is GPS, free Wi-Fi, or a polite voice alerting you about upcoming stops, these small but powerful chips enhance our daily habits.

Electric vehicles are typically more feature-rich than analogue ones. Travelling with them is smooth and hassle-free, with tools for guidance, roadside assistance, parking, etc. In addition to avionics, power conversion systems, and engine control systems, aviation also makes up another major interest.

What Did the Government Do to Solve These Problems?

Understanding the fact that it is an important thing for many industries, the government has launched a plan worth 76,000 crore rupees to encourage and incentivize people in the Industry. This plan will include small policies for small and big ventures manufacturing silicon semiconductors, display FAB, compound semiconductors, silicon photonics, sensor FAB and other related products.

Ashwini Vaishnaw, Minister of Electronics and Information Technology, attended the launch event and cited that “Electronics manufacturing in India is expected to grow to $250 billion over the next five years. Think of how much we will benefit if this surge is met by local chip production. It is estimated that the electronics manufacturing industry could reach $300 billion with local sourcing”.

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