Semiconductors are the new buzzword in the lexicon of world of powerful advanced nations and India has very rightly started devoting its attention on the invaluable product, which has the power of not only shaking the industrial foundations of the present-day world, but also can make or mar the future of any country’s economy
But for the Corona pandemic and also the Russia-Ukraine war, the advanced and emerging economies of the world would not have awoken to the blackmailing power of these tiny chips.

During the Corona pandemic, the supply chain of semiconductor chips was broken and the countries realised the necessity of having alternative sources of supply of semiconductors.

The users of semiconductors chips like manufacturers of mobile phones, computers, auto vehicles etc will be decapitated, due to disruption in supply chain.

Due to ongoing tech war, the US and its partner countries are now facing the brunt of Chinese retaliatory moves resulting in supply crunch, which is adversely impacting on high tech industrial goods in advanced economies.

Hence, by banning the supply of high-tech equipment needed for production of semiconductors, the US wants to punish China amid high-tech economic war.

India must take a lesson from this ongoing tech war, if the country wants to protect itself from succumbing to the blackmailing tactics. In case of developing tension over borders, the adversary need not launch a full- fledged war, it has to just stop the supply of these high-tech products or raw materials, with stocks limited only to a few countries, mainly China.

Since India is hundred percent dependent on imports, including 27 percent of this comes from China, its predicament can very well be understood.

Post Corona and the Russia-Ukraine war, the evolving geo-economic and geopolitical environment has further added to the concerns of India and other industrialised countries as it is feared that China may use these as weapons of economic coercion during undeclared war.

Experts fear that in case China invades and overtakes Taiwan, its chips supplies would come to standstill and if the Western world militarily reacts to the Chinese invasion of Taiwan, functioning of factories producing sensitive chips may come to a halt or China may not permit the exports of semiconductor supplies to rival countries, or can market them at excessive price.

This is bound to impact on all production activities of advanced high-tech equipment like mobile phones, household gadgets, auto parts, defence, and space applications equipment etc.

Semiconductor industry will be a key driver of a country’s economic strength, national security, global competitiveness, and technology leadership.

That these tiny chips can be weaponized during the diplomatic or military crises has very well been recognised by India and other big economic powers. The giant manufacturers of tiny chips are in search of alternative sources or countries for production and India has emerged as the prime destination.

The Semicon-2 organised in Gandhinagar on July 28, inaugurated by Prime Minister Narendra Modi and attended by who’s who of the world's semiconductor industry has raised hopes and expectations to place India on the world map of semiconductors production.

The advanced economies are looking towards India with high expectations, as the country’s leadership has shown political resolve to support the setting up of a high-labour and capital-intensive semiconductor production facility.

India needs to acquire the knowhow of assembling them from technical resources to trained manpower. To attract international semiconductors giants to make India their second home for semiconductor hubs, the government of India has offered huge financial incentives to them.

The G7 summit held in May last, without naming India, referred to the possibility of making the country a production hub. The G7 statement said, “We underline the importance of cooperating both within the G7 as well as with all our partners to enhance global economic resilience, including by supporting a more significant role for low and middle-income countries in supply chains...”

Though China holds only five percent share of the world semiconductor market, it has a monopoly in semiconductor packaging technology, which is a low end segment of the semiconductor production chain.

This is a labour intensive segment and China has definitely emerged as a favourable partner. On the other hand, the self-ruling Taiwan holds over 65 percent of all and over 90 percent of advanced chips.

Hence, the Indian government is leaving no stone unturned to make the country a production hub in the next decade. To this regard, it has seriously geared up to create an appropriate ecosystem.

A semiconductor mission was set up last year which is a specialised and independent business division within the Digital India Corporation which aims to build a vibrant semiconductor and display ecosystem to enable India’s evolution as an international hub for electronics manufacturing.

Under this mission, a scheme has been devised for setting up semiconductor fabs units with substantial financial grants to attract Indian and multinational companies. During the QUAD summit in Washington DC in September 2021 and later during his late June bilateral visit on the invitation of US President Joe Biden, PM Modi had a very impactful meeting with leaders of the semiconductor industry.

PM Modi exhorted them to set up chip fabrication foundries in India. Some of the leading chips companies have responded positively as India has emerged as a huge market for semiconductors. Since electronics permeates all sectors of economy, the electronics industry has cross-cutting economic and strategic importance.

The world electronics market is around USD 2 trillion and is expected to grow fast in coming years given the increasing penetration of emerging technologies like artificial intelligence, 5G, robotics, smart mobility, smart manufacturing, communication etc.

Semiconductors are building blocks of electronics devices, which are used to power a vast array of electronic equipment and devices ranging from smartphones, cloud servers to new generation auto driven cars, industrial automation and critical infrastructure powered by semiconductors.

In this backdrop, to emerge as the third largest economic superpower, India has hastened its domestic and international efforts as well to become at least self-reliant in the semiconductor industry. The self-reliant vision of India cannot be achieved without a semiconductor industry of its own.

***The writer is a senior journalist and strategic affairs analyst; views expressed are his personal