07/04/2025
Electronic parts and components now make nearly 40% of the cost of a new internal combustion engine car, compared to less than 20% two decades ago. The majority of this increase is due to semiconductor chips.
With the majority of semiconductor manufacturing and supply capacity concentrated in a few countries, including Taiwan, South Korea, the United States, Japan, and, more recently, China, governments around the world have realised that treating chip manufacturing as a strategic imperative is in their national interest.
India, as one of the first countries to recognise importance of semiconductor chip manufacturing, has launched a semiconductor mission to propel the chip and display industries forward.
What are Semiconductors?
Semiconductors are materials that transmit electricity between conductors and insulators. Pure elements, such as silicon or germanium, or compounds, such as gallium, arsenide, or cadmium selenide, can be used.
Semiconductor Chips’ Importance:
Semiconductor chips are the fundamental building blocks that act as the heart and brain of all modern electronics and information and communication technology goods.
These chips are currently found in modern autos, household appliances, and critical medical devices such as ECG machines.
Recent Demand Increase: The pandemic-driven effort to bring large portions of daily economic and vital activity online, or at least digitally enable them, has highlighted the importance of chip-powered computers and smartphones in people’s lives.
The pandemic and accompanying worldwide lockdowns prompted the closure of critical chip-making facilities in countries including as Japan, South Korea, China, and the United States. Its scarcity has cascading repercussions, due to the pent-up demand.
India’s Policy on Semiconductors
India’s Semiconductor Demand and Related Initiatives: India at present imports all chips, with the market expected to reach $100 billion by 2025, up from $24 billion currently.
It is a delayed but welcome acknowledgement of the strategic importance of semiconductors, to a modern economy. The Union Cabinet has earmarked an amount of 76,000 crore for supporting the establishment of a “semiconductors and display manufacturing ecosystem.”
India has also announced the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), which will spend Rs 3,285 crore over eight years to promote the manufacturing of electronic components and semiconductors.