the government creates comfortable conditions for producers

We have written several times that China is developing its semiconductor industry infrastructure. Due to the trade wars with the United States, China has no choice but to become completely independent from foreign chip suppliers.

And now India is doing about the same thing. “Almost” – because it is not sanctioned by the United States, which means it can work with component manufacturers without any problems. Now the government is negotiating with the largest companies in the world, inviting them to open their factories in India.

Why does India need “own” chips?

Now active negotiations are underway with at least 12 different companies. India invites them to open production lines in the country within 2-3 years. During this time, the government of the country will prepare the necessary infrastructure to launch this type of production.

Indian Minister of Railways, Communications, Electronics and Information Technology Ashwini Vaishnaw is directly involved in the negotiations. Unfortunately, he did not name the companies with which the government is now negotiating, but said that these are international organizations, major market players.

According to experts, now the country’s government is trying to negotiate really with the largest corporations in the world, including Samsung and TSMC. The latter has long been planning to deploy additional production lines to increase the supply of chips. Well, now, as far as can be judged, the situation for this is just perfect.

Earlier, representatives of both companies said they were in favor of opening new factories in other countries. They named India as one of their priorities. In addition, Samsung is building additional factories in the US, and TSMC is in talks with Japanese partners in an effort to deploy new lines in that country.

The Indian authorities are planning to deploy a full cycle of production of semiconductor elements on the territory of the state. This is good both for manufacturers, who get the opportunity to use alternative production sites, and for the country itself, which will no longer depend on the supply of semiconductor systems from other countries. The most important for the country is the production of crystal chips, as well as the process of forming microcircuits from crystals. In addition, display manufacturers will be invited.

First, India plans to launch the production of microcircuits according to the technological process long mastered by large companies. We are talking about technological processes 28-45 nm. Then, as the production sites of different companies expand, India plans to stimulate the launch of production of more advanced chips. This is, in fact, a necessity, since Taiwan and South Korea have already mastered the 4nm process technology.

Now India has big problems with the import of chips – due to their global shortage, the country receives less than millions of microcircuits, which, of course, affects the industry and the economic situation. The government of the country believes that if production is deployed within the state, then this will solve the problem of deficit for at least several years. India is ready to allocate $ 10 billion to solve its problem.

And what about other countries?

Of course, not only the government of India is thinking about solving the shortage of semiconductor components.

United States. For several years the country has been calling on foreign companies to open branches at home, with the launch of production lines. And the country has been able to reach an agreement so far. Thus, TSMC has begun construction of new lines in Arizona. In addition, Samsung built factories in Texas a few years ago, and they are working.

Also, the country’s government has allocated about $ 50 billion for the development of its own semiconductor industry. We are talking about the government’s intention to become at least partially independent from the supply of chips from other countries.

Japan. The “Land of the Rising Sun” operates in a similar way. She invited TSMC to open a factory in the country. In addition, the Sony Group will also launch new industrial lines. Moreover, Sony and TSMC will build a joint 20nm chip factory in Japan. The launch of production is planned for 2022.

China. We are not talking about the production of simple components – everything is in order with their production here, but about the production of modern processors, video chips and other systems. If the United States is discussing the possibility of investing $ 110 billion, then China has already decided to invest $ 1.4 trillion in its own industry in 5 years.

Alibaba Group, Huawei Technologies Co. Ltd, SenseTime Group Ltd. and a number of other high-tech companies. The main task set before them is to reduce the dependence of the electronic industry in China on other countries, mainly the United States. This was announced at the launch of the Made in China 2025 program. Last year, the country allocated $ 563 billion, which is five times more than the investment that the United States is going to invest in 5 years.

All this is financed not only by the state, but also by private capital. The problem is that the investment should really be very large, because China is planning to import substitution technologies from IBM, Oracle, EMC and other companies that it uses now.

South Korea. This country will also invest more in the development of the semiconductor industry than the United States. The country’s government in May 2021 announced its intention to allocate $ 450 billion over 10 years. Now semiconductor products account for 14.6% of the country’s exports, bringing in a good income. Therefore, South Korea is going to further develop in this direction.

The state will support Samsung and SK Hynix – companies that are already firmly on their feet. They manufacture, among other components and devices, DRAM and 3D NAND chips in short supply. But we are not talking about modern processors and systems on a chip. Samsung supplies processors, of course, but they are made by other companies around the world. There is no stand-alone production. Moreover, even certain parts of Samsung’s Exynos are designed in the USA.

The state plans to develop a full cycle of production of its own chips. And the funds mentioned above will be used to achieve this goal. South Korea plans to train 36,000 qualified engineers from 2022 to 2031. The country will help developers, manufacturers and suppliers of chips to reduce the cost of production by reducing taxes and providing a number of tax incentives.

What’s next?

Most likely, the problem of the crisis will still be resolved, since several countries and major corporations are working in this direction at once. Not billions are invested, but trillions of US dollars. The way out of the crisis can probably be compared with a chain reaction – now little by little there are qualitative changes, but in a year or two they will work and there will be a qualitative leap to a new level, when dozens of companies will produce chips.

But then a new problem may arise – if there is no growth in demand for electronic devices, or at least the dynamics is not as active as experts assume, then the second crisis is quite real, the cause of which is overproduction and dumping in the semiconductor market.

In general, there can be many scenarios, and only time will tell which of them will be the only real one.

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