India's Semiconductor Ambitions
Why Chips Matter
How semiconductors power phones, cars, power grids and AI, why shortages can halt entire industries, and why countries now treat chips as strategic.
Semiconductors, or chips, are the brains of modern technology. They are found in:
- Phones, laptops and TVs.
- Cars: a modern car can contain hundreds or even over a thousand chips.
- Power grids, solar inverters and EVs.
- Medical devices.
- Defence systems.
- AI data centres.
The shortage lesson
During 2021-22, a global chip shortage hit industries worldwide. Carmakers, including in India, cut production and customers waited months for vehicles. The shortage showed how dependent economies are on a few chip suppliers.
Concentration
Chip production is concentrated:
- Taiwan makes most of the world’s most advanced chips.
- South Korea, China, Japan and the US are also key.
- Specialised equipment comes from the Netherlands (ASML), the US and Japan.
Strategic importance
Governments now see chips as strategic, similar to energy:
- The US CHIPS Act (2022) and EU programmes offer big subsidies.
- Export controls restrict advanced chip technology to rivals.
India’s position
India is a huge consumer of chips and has strong chip design talent, but until recently had no commercial chip fabrication plants. This makes India dependent on imports.
In 2021, a customer books a new SUV but waits nine months for delivery. The carmaker can't get enough chips for dashboards and engine controls, showing how tiny components can hold up big industries.
Chips are in cars, power grids, medical devices, defence and almost every modern product.
- Chips power phones, cars, grids, medical devices, defence and AI.
- The 2021-22 shortage halted production worldwide.
- Production is concentrated in Taiwan, South Korea and a few others.
- India consumes many chips but has had no commercial fabs.
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