HOW IS THE SHORTAGE BEING DEALT WITH?

Recent months have seen an increase in demand for chips, and panic buying has further
squeezed capacity and raised the cost of even the cheapest components of nearly all
microchips.
We are all feeling the effects of semiconductor shortages. Semiconductor producers and their
suppliers are therefore working non-stop to increase production and development capacities.
In particular, market players in Asia and the United States are really counting on growth.
TSMC recently announced plans to invest heavily to expand production and develop new
technologies in the next three years to alleviate the chip shortage. Around € 30 billion has
been earmarked for the construction of new chip factories in the U.S. state of Arizona.
Samsung is also planning massive investments. By 2030, € 125 billion is to go towards chip
manufacturing, including new production sites in the United States and Korea.

Taiwan plans to get involved in chip manufacturing at several stages, which includes silicon
fabs, display fabs, and semiconductor packaging. The country will start with the fabrication
of mature parts with 28nm to 45nm processes and will request a road map from companies
who are interested in moving to more advanced processes production techniques over time,
the minister said. Recent announcements by Taiwan Semiconductor Manufacturing Co. and
Samsung Electronics Co., two companies that manufacture the world's most advanced chips,
indicate that both companies are willing to expand globally with new facilities in the U.S. and
Japan.
However, in addition to the United States and Asia, chip manufacturers are also counting on
the European market. Intel already operates a chip factory in Ireland and is planning an
additional site in Europe. At the International Motor Show (IAA), Intel CEO Pat
Gelsinger announced that Germany was being considered as a possible location.
Higher demand for chips has given chipmakers some room to increase prices substantially.
Earlier this year, TSMC announced a 20 per cent hike in the price of chips used in
automobiles. The companies will either have to increase the prices or absorb the higher cost
of production.
In India, dealerships are quoting incredibly long waiting times if you walk in to book a new
car now - even longer if the car is very popular and in high demand. Still, that’s also because
there are veritably many chips to work with; if you aren’t suitable to get your hands on
a new Sony PlayStation 5 or Microsoft Xbox Series X or Series S gaming press. Smartphone
makers, including Apple, have said that deals of new phones have been impacted by
the deficit of factors.
 FUTURE OF SEMICONDUCTOR CHIPS

India is joining a growing list of countries, including Japan, Europe, and the U.S., setting
aside multibillion-dollar subsidies for domestic chip manufacturing after a global shortage of
the vital component severely impacted numerous industries. India has an ambitious mission
of $300 billion of electronics (manufacturing) by 2025, which includes not just
manufacturing electronics but components as well.

In an interview, Information and Technology Minister Ashwini Vaishnav revealed that

several semiconductor manufacturers plan to set up factories in the country and begin
production soon. After the government approved a production-linked incentive scheme for
semiconductor and display board production in the country last week, this is a welcome
development.

The government will begin taking applications for the incentive schemes in January. This is
in an effort to develop a whole ecosystem for the chip manufacturing industry and prevent
shortages from occurring in the future. "The response has been favorable," said one official.
Several big players are in talks with Indian partners, and many of them are interested in
setting up direct operations here," Vaishnav told Bloomberg Television.

To authorize applications for setting up at least two greenfield Semiconductor Fabs and two
Display Fabs in the country, the government of India will work closely with the state
governments to establish High-Tech Clusters with the required infrastructure in terms of land,
semiconductor grade water, high-quality power, logistics, and research ecosystem.

The establishment of domestic capabilities in semiconductor production will become a

multiplier across different sectors of the economy and result in higher domestic value
addition in electronics manufacturing.