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Is Semiconductor Technology a Strategic Industry?

Is Semiconductor Technology a Strategic Industry?
by admin on 03-06-2015 at 7:00 pm

 Dependence on electronics is acute in all fields today. This includes both civilian and military use. Whether the technology used is state of the art or classic in nature, importance is pointed to the necessity of solid state electronic hardware in everyday life. In such an environment the need to ensure the availability of semiconductors is critical for any user, be it commercial or defense sectors or the government. Thus system producers need to ensure a robust supply source for all their needs that is dependable under all circumstances. Therefore, governments get involved in this activity as part of governance responsibilities.

A compounding factor is the various forms of technology control. Export regulations by government on certain sensitive and/or dual use technologies puts a question mark on the availability of certain kinds of materials/products for dependent markets and economies. This leads to a growing cry for development of indigenous or local supply sources.

Although the semiconductor industry is spread across the world over, the technology to manufacture it in commercially significant levels is limited to very few countries (USA, Korea, Japan, etc.). The underlying need for dependable infrastructure – both in cost and availability – has forced most aspirants to look the other way when it comes to thinking of implementation of this demand, in certain geographies. China invested heavily in the semiconductor manufacturing sector during 1990s and early 2000s. Thus it has been able to establish itself as a formidable force that other countries take note of. The extent of government support that enabled this transformation is significant. Even the USA is known to give considerable monetary support to the semiconductor industry – openly and in concealed forms – towards developing and maintaining this technology leadership.

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An additional factor is the sheer monetary cost to the exchequer. The world semiconductor trade is about 300 billion dollars. India is a significant consumer with its growing market for mobile communication and other electronics consumables. India imported over $25B of electronics during 2010-11; this included over $6.5B for semiconductors. Significantly, this import accounts for almost 100% of the semiconductors consumed by Indians; which means, the local production of semiconductor hardware is almost zero. The significant investment and activity seen in the electronics/IT world in India – by leading and startup companies alike – are primarily in design, software and services sectors.

India’s own annual electronics import bill is expected to cross its humongous oil import bill (over 100 billion dollars annually) in the next few years. Given all these factors there is indeed a dire need to ensure local manufacture. The Indian Government has given an in-principle approval for 2 fabs to be set up with technical know-how sourced from global majors. It is here that the “Make in India” campaign by the (now, not so) new Indian Government is pushing for the manufacture of semiconductor chips in India. Given the flux and the large number of coordinating activities that abound in these kinds of endeavors, it is but natural for things to take time, especially in a country like India.

Indeed, the semiconductor industry has turned out to be one that can be called strategic in nature!


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