Why Is There a Chip Shortage

1. Why Is There a Why Is There a Chip Shortage Indigenization Of Chip Manufacturing And Indigenization Of Chip Manufacturing And Its Strategic Importance Its Strategic Importance Chip Shortage - - The semiconductor supply chain has evolved into a significant strategic asset in geopolitics. Russia restricted the export of noble gases, including neon, a critical component in chip manufacturing thus taking a strategic stance towards rectifying global shortage. Earlier, Japan restricted exports of high-purity hydrogen fluoride, an etching gas used in semiconductor manufacturing, to South Korea. The US Chip Act has temporarily challenged the supply chain for Chips in America, restraining companies focused on manufacturing of chips in America from sourcing lagging end chips from Chinese Chip manufacturers. Continuous COVID- 19 outbreaks and heat-induced power outages in China have impacted raw material supply and the trade associated with Chinese chip producing companies, assembly, and testing thus inducing shortage. Furthermore, the Russia-Ukraine conflict has raised prices and limited the supply of raw materials used in semiconductor production, causing havoc in the industry’s key markets thus driving the global shortage. Decline In US Chip Production The United States Senate and House of Representatives passed the US CHIP Act in July 2022 to bolster manufacturing of Chips in America, which includes $52 billion in government subsidies for semiconductor research and production in the United States. The bill also facilitates manufacturing of Chips in America with tax breaks totaling $24 billion, intending to increase manufacturing of Chips in America and alleviate some of the supply chain issues plaguing the country’s automotive and consumer electronics industries, among others. The performance of all significant U.S. defense platforms and systems depends on semiconductors thus the global shortage serves as a market restraint. As a result, the United States’ capacity to defend itself is directly threatened by the deterioration of manufacturing capabilities in microelectronics and Chips in America. Based on the data from Semi-Conductor Industry Association, The United States now only accounts for www.aviationanddefensemarketreports.com

2. 12% of the world’s semiconductor production capacity, down from 37% in 1990 owing to the global chips shortage. 75% of the world’s modern production of chip is now concentrated in East Asia owing to Chinese chip manufacturers and the growing Chinese semiconductor industry. However, within East Asia, Taiwan accounting for the lion’s share followed by Chinese chip manufacturers owing to the fast growth rate of Chinese semiconductor industry. Impact on Commercial Aviation Industry Due To Shortage Of Chips In America And Europe Aerospace businesses are facing shortages of semiconductor chips and polymers, as well as paying far higher prices for basic materials such as steel and aluminum. Input prices are rising at a time when pricing power in the commercial aerospace www.aviationanddefensemarketreports.com

3. industry is limited due to overall sluggish demand, making it more difficult for equipment manufacturers and their suppliers to pass on the additional costs to consumers. The aerospace sector could face severe chip shortage and raw materials if demand picks up and the pre pandemic 2019 levels are reached. It is believed that global air travel has recovered to 70-75% of pre pandemic levels. Indian Chip Manufacturing Companies India chip production will have to follow the US example and concentrate on establishing leading-edge Indian chip production companies with advanced technologies. There are multiple Indian conglomerates that have shown interest in chip production, once operational Indian chip manufacturing companies could also export a considerable share to the Global chip market. This will ensure self-reliance for strategic semiconductor requirements within the India chip manufacturing sector especially the Sub 5nm chips that are critical for advanced AI systems. AI-enabled weapon systems will be critical for countering emerging threats and ensuring military dominance. CONCLUSION The current Global chip shortage has exposed the importance of indigenization of chip production. A country’s chip production capabilities should be able to cater to both the hi-tech industries like Aviation and Defense and to consumer segments. Though the Global chip shortage has not stalled the manufacturing of these systems completely, it has definitely increased the demand due to supply side Global chip shortage Visit here: - https://bit.ly/3OujwCs www.aviationanddefensemarketreports.com