Semi-conductors and their Relevance


Relevance of Semi-Conductor Industries


The US has banned the sale of advanced computer chips to China, escalating efforts to contain China’s tech and military ambitions. The moves are designed to cut off supplies of critical technology to China that may be used across sectors including advanced computing and weapons manufacture. The crackdown marks the most significant action by the USA against China on technology exports in decades, escalating a trade battle between the world’s two most powerful economies.

The consequences of the above-mentioned are: 

  • Arbitrary Grounds For Imposing Sanctions 

The excuse that the US has a strategic advantage in vital technologies may encourage other nations to enact similar restrictions, which might spark a trade war. The reliability of the world’s trading and financial order will be impacted by how broad these penalties are. 

  • Neo-Colonial Characteristic

The United States’ prohibition on the sale of machinery for producing chips will not only have an impact on China but will also deprive other nations of any potential advantages. Mercantilist reasoning rather than arguments for the global public good will not strengthen the legitimacy of the order that the Americans desire to uphold.

  • Disruption of the Supply Chain

These penalties have the potential to increase uncertainty in international supply networks. Some nations, like India, would be drooling at the thought of taking advantage of this opportunity. However, it is likely that the rising uncertainties in the global trading system will significantly reduce these profits. China is too significant to be excluded. 

  • Neutralizes the efforts towards climate change

It is obvious that the primary area where international cooperation is necessary i.e., climate change—is being neglected. While the superpowers are engaged in a mercantilist conflict, it is challenging to envision coordinated global action on climate change.

Semi-conductors and their significance

Semiconductors are substances with conductivities halfway between those of conductors and insulators. They could be compounds like gallium, arsenide, or cadmium selenide or pure elements like silicon or germanium. They are the fundamental components that act as the brain and heart of all electronics and devices utilising information and communications technology. These chips are now a standard component of modern cars, household appliances, and crucial medical equipment like ECG machines.

The desire to bring significant portions of daily economic and necessary activities online or at least digitally enable them as a result of the Covid-19 outbreak has brought attention to how important chip-powered computers and cell phones are to people’s life. 

Given that the first shortage generates pent-up demand that leads to the subsequent famine, its shortage has cascading repercussions.

Almost every industry, including aerospace, transportation, communications, clean energy, information technology, and medical equipment, depends on semiconductors. 

Demand for these essential components has outpaced supply, resulting in a global chip shortage, which has stunted economic growth and cost jobs. Modern electronics, which are the backbone of Industry 4.0’s digital transformation, are built on semiconductors and screens.

The development of ICT (Information and Communication Technologies) is fueled by these semiconductor chips, which are also major factors in the current globalisation of the world. With deeper integration into the global value chain, the growth of the semiconductor and display ecosystem will have a compounding effect on other economic sectors. These chips are only produced in a small number of nations worldwide. 

The United States of America, Taiwan, South Korea, Japan, and the Netherlands are the leading nations in this sector. Germany is a new ICT producer as well.


In order to meet future demand for developing technologies like artificial intelligence, 5G, the internet of things, and others, new semiconductor fabs are now being built. Professionals in the sector are aware of the necessity to avoid flooding the market with new products.


Ten new fabs started construction in 2022 or are scheduled to do so by the end of the year, and 13 more fabs are scheduled to start building in 2023. The industry anticipates 200 fabs using 300mm technology by 2026. It takes 1-2 years to finish construction and another year to set up equipment and get ready for wafer starts. Although it takes time, the practice is essential to reducing the current market turmoil.

The fabs’ construction is being held up by a lack of personnel and construction materials. Due to growing demand, fabs that started construction in 2021 are now having trouble getting the machinery needed to manufacture semiconductors. Due to the current chip scarcity, complex semiconductor chips like microprocessors, high-end microcontrollers, and Field Programmable Gate Arrays (FPGAs), which are necessary parts of fab equipment, are in limited supply.

When compared to the automotive or IT industries, the semiconductor manufacturing equipment market accounts for a little portion of sales, yet this equipment is essential for extending the number of fabs and chip production capacity. To increase wafer capacity and satisfy the rising demand, it is essential to make sure semiconductor chips are allocated to this market sector.

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