Chip Crunch

A monolithic integrated circuit (IC) also known as microchip, silicon chip, computer chip or chip is basically a miniaturized electronic circuit that consists mainly of semiconductor devices, as well as passive components.
Automotive semiconductor ICs with different functionalities are used in various automotive products, like navigation control, infotainment systems, and collision detection systems.
The electrification and automation of automobiles have led to increased demand in semiconductor wafers.

Soaring demand for smartphones, gaming consoles, tabs and other electronics by homebound consumers has prompted semiconductor makers to divert capacity away from the auto industry, leaving car parts suppliers struggling to keep their customers supplied.
After the global auto industry shut down in the early phase of the coronavirus crisis and the resulting abrupt drop in demand, automobile manufacturers across all regions increased their production volumes much faster than expected by market experts. This resulted in large scale supply shortages for semiconductors.

A shortage of auto chips could impact 672,000 units of global light vehicle production in the first quarter, said data firm IHS Markit, warning that the disruption could extend into the third quarter.

Corporations and consumers globally use semiconductors—small conductors of electricity also known as semis or chips—in millions of devices, including space vehicles, car computers, smartphones, medical equipment, appliances, and more.
In 2019, the semiconductor industry in the United States accounted for 47 percent of the global semiconductor market.
Korean manufacturers are second in the world with about 19 percent of the market, with companies from Japan and the European Union (EU) each accounting for ten percent of the market.

The Indian electronics sector is tremendously growing with the demand expected to cross USD 400 billion by 2023-24.
Domestic production has grown from USD 29 billion in 2014-15 to nearly USD 70 billion in 2019-20 (Compounded Annual Growth Rate of 25%).
Microchip production will help India move up from an assembler to a manufacturer, with considerable multiplier effect on the economy.
Most of this production takes place in the final assembly units (last-mile industries) located in India and focussing on them would help develop deep backward linkages, thus inducing industrialisation. This was an idea propounded by economist Albert O Hirschman in his theory of ‘Unbalanced Growth’.
The Economic Survey 2019-20 also promoted this idea and suggested “assembly in India for the world”, in a bid to create four crore well-paid jobs by 2025 and eight crore jobs by 2030.
The government recently unveiled three schemes (Production Linked Incentive, Component Manufacturing Scheme and Modified Electronics Manufacturing Clusters Scheme) with an outlay of about ₹48,000 crore to promote electronics manufacturing in India.

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