Chip industry under focus as US and China compete fiercely

Chips are the lifeblood of modern devices including mobiles and cars. The shortage has come as global chip usage and demand has grown dramatically over the past few years. The United States has taken great steps to fill this deficit and increase business. With this, the country can launch as many as 40 projects, which will create employment opportunities for 40,000 people.

Media reports say that in the past two years, the United States has fully realized that semiconductor chips are as important as fuel at the heart of the modern economy. It is used for various reasons including controlling the use of electricity in cars. In 2021, an average of 1,200 chips were used in each vehicle, double the number in 2010. But recently US companies are not able to provide chips compared to the demand. The chip crisis cost automakers $210 billion in lost sales last year, according to consulting firm ElixPartners. The United States fears that the market may go to China, their main rival in this sector.

In this context, the US government and various companies are spending billions of dollars to meet domestic demand and ensure supply to other countries.

After 2020, semiconductor companies have proposed more than 40 projects across the United States, estimated to cost $200 billion. According to the Semiconductor Industry Association, 40,000 jobs will be created if these projects are launched.

Pat Gelsinger, chief executive of US technology company Intel Corporation, highlighted the importance of chips as well as oil to keep cars moving normally at a meeting last October. He said, there has been a stir in geopolitics in the last five decades around fuel oil mining. Chip factories will be the center of attention for the next five decades.

Fuel oil was at the center of industrialization and economics in the last century. At that time, the United States was one of the main suppliers of oil. Securing semiconductor supply is more complicated than that. Where one barrel of fuel is another barrel of oil, semiconductors come in many types and capacities. Prices also vary. Its supply system in different countries is also complicated. In this context, the United States alone cannot produce chips for all countries.

Meanwhile, President Joe Biden’s administration has agreed to provide $52 billion in subsidies for semiconductor production. Last August, the A-related agreement ‘CHIPS and Science Act’ was completed. The deal was overseen by the Biden administration’s commerce chief, Mike Sochmit. He said, want to reach the top position in chip production. Undoubtedly, this is an ambitious plan.

Last November, the CEO of Ford Motors Company, Jim Farley, said about the chip shortage, that his factory produced 40,000 cars less than the target due to the lack of chips last year.

Not only car chips, but also chips used in other devices are in short supply. Until 2014, doctors at various hospitals used a chip to control room air pressure and humidity to treat insomnia patients. Later, the use of chips in this field increased a lot. Apart from this, the use of chips has increased in other fields including mobiles.

Apart from USA, China, Taiwan, South Korea is one of the chip producing countries in the world.

(Inputs for this write-up taken from various sources on internet. Image from Wikipedia.)