*SEMICONDUCTORS*
It's quite inevitable that you have come across the word SEMICONDUCTOR in past six months. Global shortage concern & its impact on other industries.
SEMICONDUCTORS are integral parts of all electronics & electronic appliances used today. It can be classified in several categories,memory chips,micro processors, integrate chips. Global shortage is unprecedented. The demand & supply gap has affected the supply of various goods such as car, laptops, phones & others electronic devices.
*WHY IS THERE IS A SHORTAGE*
The semiconductor shortage began because of 1.*increased demand for more advanced chips* from the consumer electronics & computer industries in Covid19 pendamic.
2.In addition to consumer demand. There was also surge in demand for semiconductors from automobile industries by mid 2020.
3. This is led by adopting more technological innovation such as driver assistance system and autonomous driving.
*Intel has projected that semiconductor will account for 20% of the input cost fir new premium cars vs 4% in 2019*
This led to manufacturers struggling to keep pace with the demand for semiconductors amidst global lockdown that severely impacted the global supply chain.
To some extent panic buying and stockpiling by companies that use chips in their product to the severity of the shortage.
The largest manufacturers in East Asia- *Tiwan's TSMC and South Koreans Samsung which manufacturers 70% of the world Semiconductors* .
High entry barriers, steep learning curve, high upfront capital investment and long investment tenure have been the biggest challenge for new entrants in this segment.
*Globally countries and companies has announced huge capex in semiconductor market*
TSMC has notified that it will spend $100bn in next 3 yrs to increase the production capacity
Samsung also notified to spend $250 bn in next 3yrs.
India has came up with PLI schemes worth 76k cr in this sector. As per policy govt will subsidise 50% of the manufacturing project cost for 6yrs to reduce the cost of production
Tata's also announced to their plan for semiconductor setup worth $300mn
Outlook
Revenue Growth for semiconductor & semiconductor equipment sector has been in the double digits during 2021. Growth in this sector is expected to continue to be strong in 2022 because of the pent-up post Covid demand
IESA projected that electronics production industry in India will be $410bn by 2025 led by annual growth of 30%.
Electronics Systems Markets expected to grow 2.3x to touch $ 160bn by 2025.
*So far 2022 seems likely to be another fruitful year for the semiconductor industry* .