India to chip in after pact with US, may fill world's semiconductors gap

By India Today News DeskPeople buying new cars are getting the second key after months of wait. Costs of electronic goods and computer components have shot up. And all this is because of a shortage of a chip that costs hardly a few dollars.

Not only could India help such issues never crop up, the country could also realise its long-nurtured dream of becoming a hub for electronics goods. And it could also help bridge the global demand-supply gap in semiconductors.

On Friday, India and the United States of America signed a memorandum of understanding (MoU) on semiconductor supply chain and ‘Innovation Partnership’.

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The US and China are giants in chip manufacturing. So, India’s pact with the US to strengthen cooperation in the semiconductor sector to facilitate commercial opportunities and development of innovation ecosystems is likely to help India immensely.

SEMICONDUCTORS AND TAIWAN

The pact seeks to establish a mechanism between the two governments on semiconductor supply chain resiliency and diversification. US Secretary of Commerce Gina Raimondo travelled to India to sign the memorandum of understanding with Commerce and Industry Minister Piyush Goyal.

Most of the semiconductor chips are produced in Taiwan by American and Chinese companies. There is a real threat of huge disruption in the case of Chinese aggression against Taiwan.

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China claims Taiwan to be part of its territory and has been looking for “reunification”. The relations between the two countries appear to have deteriorated sharply.

US Secretary of Commerce Gina Raimondo said India’s desire to expand its advance manufacturing of semiconductors was totally aligned with her country’s desire and goal to make the American supply chain more resilient.

Commerce and Industry Minister Piyush Goyal also said that the MoU would help in expanding mutual cooperation and enhancing resilient supply chains.

SEMICONDUCTORS AND THE CRISIS

From automobile to electronic goods and to smartphones, all need semiconductors. These are the chips. And a disruption in semiconductor supply has led to billions of dollars of losses for major companies across the globe.

Semiconductor chips are made from silicon, one of the most available substances on Earth, and are fitted into microcircuits that power electronic goods and components. The raw materials come mostly from Japan and Mexico.

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The crunch in semiconductors supply began during the Covid-19 pandemic and went on to intensify in 2021. A Goldman Sachs report suggested that at least 169 industries had been impacted by the global chip supply shortage in 2021. The crunch has eased now but some disruptions in the supply chain still exist.

Some popular companies that manufacture semiconductor chips are Intel, Samsung, Taiwan Semiconductor Manufacturing Company (TSMC), Broadcom and Nvidia.

With the pact signed on Friday, US Secretary of Commerce Gina Raimondo said the US would like to see India achieve its aspirations to play a larger role in the electronics supply chain.

“We have already begun action as against that MoU (by) tasking both Indian and the American semiconductor industries to prepare an assessment of… gaps and lack of resiliency in the supply chain and that will guide our work,” Gina Raimondo said.

Going ahead, it is likely that India will achieve its long-nurtured dream of becoming an electronics hub and help that there is no demand-supply gap in semiconductors. It is also likely that buyers won’t ever have to wait for the second key to their vehicles.