{"id":209432,"date":"2022-10-04T20:22:21","date_gmt":"2022-10-04T14:52:21","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=209432"},"modified":"2022-10-04T20:22:21","modified_gmt":"2022-10-04T14:52:21","slug":"fabs-the-east-asian-lesson-for-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/fabs-the-east-asian-lesson-for-india\/","title":{"rendered":"FABS: The East Asian lesson for India"},"content":{"rendered":"\n

Source<\/strong>– The post is based on the article \u201cFABS: The East Asian lesson for India\u201d <\/strong>published in the mint <\/strong>on 4th October 2022<\/strong>.<\/p>\n

Syllabus: <\/strong>GS3- Economy<\/p>\n

Relevance<\/strong>– Semiconductor manufacturing<\/p>\n

News<\/strong>– The article explains the experience of East Asian countries in promoting semiconductor manufacturing.<\/p>\n

Recently the central government has announced some changes in the production-linked incentive linked scheme for semiconductors.<\/p>\n

It is now offering fiscal support of 50% of total project cost to companies setting up semiconductor plants irrespective of chip type.<\/p>\n

The government wants to promote the chip making industry amid the global move to de-risk semiconductor manufacturing. There is a global effort to diversify their production after the pandemic.<\/p>\n

What are the challenges in chip manufacturing?<\/strong><\/h5>\n

High investments are needed both from cost and technological perspective.<\/p>\n

Lower labour cost counts little in chip manufacturing.<\/p>\n

Market is dominated by the biggest players that are both highly profitable and technologically sophisticated<\/strong>. It is not easy for new players to be competitive.<\/p>\n

The chip manufacturing industry is highly dispersed geographically.<\/strong> The US leads in designing and Taiwan in manufacturing chips. They are highly interdependent. It creates a competitive advantage for them. Local players do not have the capability to match their scale.<\/p>\n

What is the backstory of Taiwan in chip manufacturing?<\/strong><\/h5>\n

In the 1980s, Japan assumed a major share in chip manufacturing at the expense of American products.<\/p>\n

To lower Japan ‘s share, America outsourced low-tech processes in the chip value chain such as packaging to countries like South Korea and Taiwan.<\/p>\n

Later developments in Taiwan were different from other Asian countries. Foreign investment was not very helpful in shifting up to high-tech processes of the supply chain.<\/p>\n

It was government intervention in the form of promoting research that proved beneficial. The government supported the setting up of a research institute called Industrial Technology Research Institute. It transferred technology to the private sector.<\/p>\n

Another important component of Taiwan’s strategy was the foundry model<\/strong>. Manufacturers did not design their own chips. They manufactured chips for American companies who had design experience.<\/p>\n

What was the South Korean experience?<\/strong><\/h5>\n

Initial developments were the same for almost all Asian countries. South Korea also benefited in the initial stage from low tech processes outsourcing by America.<\/p>\n

But in later stages, Japan and the USA were reluctant to share licensing technology.<\/p>\n

South Korea’s large industrial conglomerates hired engineers from Silicon Valley.<\/p>\n

They approached Silicon startups for design experience. These startups were provided capital by industrial houses.<\/p>\n

How have the governments of these countries helped in semiconductor manufacturing?<\/strong><\/h5>\n

Financial support by the government was important but it was not a deciding factor for growth of semiconductor manufacturing in East Asian economies.<\/p>\n

Investment in semiconductor fabrication was financed almost entirely by companies themselves.<\/p>\n

Government support was crucial in the form of providing facilities for research. Government coordination and encouragement of investment in early stages was beneficial for these companies.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source– The post is based on the article \u201cFABS: The East Asian lesson for India\u201d published in the mint on 4th October 2022. Syllabus: GS3- Economy Relevance– Semiconductor manufacturing News– The article explains the experience of East Asian countries in promoting semiconductor manufacturing. Recently the central government has announced some changes in the production-linked incentive… Continue reading FABS: The East Asian lesson for India<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,11126],"class_list":["post-209432","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-mint","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1700719914},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/209432","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=209432"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/209432\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=209432"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=209432"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=209432"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}