The tale of a semiconductor and a chip. Semiconductors is a broader term for materials such as germanium, gallium arsenide as well as silicon. These elements are receptive to electrical current flow, and therefore used to make integrated circuits for microcontrollers that can be found in simpler analogue devices, and are also foundational elements of chips, or processors. It is an interchange that shouldn’t really happen but is more commonplace in conversations, than we realise.
Nevertheless, chips or system-on-chip (SoC) eventually find a home in processing units (think of a CPU in a PC or a processor in a smartphone), memory, graphics and broader electrical systems including in-car infotainment systems, smart home devices, even smartwatches. A chip is where more than one component is bolted on, depending on what it’s meant for. Within that, there’s a complexity of chip manufacturing processes, or nodes (3-nanometer and 6-nanometer are more advanced transistor implementations, than a 28-nanometer or larger process).
In case you are wondering why I’m suddenly referencing semiconductors and chips, that reasoning is dual-pronged. First, India has been at the centre of recent semiconductor manufacturing conversations, and second, I find there is a disconcerting lack of understanding about the semiconductor and chip ecosystem in general.
Ashwini Vaishnaw, who heads the ministries of railways, information and broadcasting, electronics & information technology, believes India will find a space among the top five semiconductor manufacturers worldwide, by the year 2030. Vaishnaw is referring to India finding a place among the countries that lead the global foundry capacity. One step closer to that mission, with recent approval for Kaynes Semicon’s semiconductor unit in Gujarat.
Long way to go though. At the end of last year, analysts at Trendforce released advanced foundry capacity data. Taiwan, with a 68% share of global capacity, holds a distant lead over Korea (12%), the US (12%) and China (8%). Their estimates suggest that by the end of 2027, Taiwan’s share will reduce to around 60%, Korea will gain slightly to 13%, the US will make gains to corner a 17% share, while Japan makes a mark with a 4% share – in all this, China drops 2% share to corner 6%.
India’s attempts to speed up a semiconductor expertise journey that otherwise is time intensive is because of pressure from geopolitical moves that are underway. Reminds me of something Intel Corporation CEO Pat Gelsinger said in March after the US government announced the CHIPS Act. “Intel’s moonshot goal is to have at least 50% of the world’s advanced semiconductors produced in the United States and Europe by the end of the decade,” he had said.
Intel’s new and expanding semiconductor foundry sites from the Silicon Desert of Arizona to the Silicon Heartland of Ohio, show these aren’t mere words. Therefore, while Taiwan’s massive capacity lead may take many years to claw away at, there’s a much smaller pie that the rest of the world will be fighting vehemently for in the meantime.
Japan’s rise in the next few years, isn’t borne from a profound sense of fiction. One of the steps towards achieving those numbers is to have Japanese tech companies partner with chipmaker and tech giant Nvidia to boost the production of cutting-edge semiconductors, particularly for AI computing processes.
The latest numbers by research firm Counterpoint indicate that AI will drive the industry’s revenue, something that’s already quite apparent. In the latest global foundry market share ranking, TSMC or Taiwanese Semiconductor Manufacturing Corporation is the distant leader with a 62% share. Samsung Foundry has a 13% share, which has remained stable in the previous three quarters too.
These foundries, such as TSMC, Samsung, SMIC, UMC and GlobalFoundries make chips for clients, which include Qualcomm, Nvidia, Intel and AMD – that’s the process of outsourcing expertise and capability. For instance, TSMC’s two biggest customers in 2023 were Apple and Nvidia.
Apple’s chips for the iPhone, iPad, Mac, Apple Watch and Apple TV are designed by the company themselves, and then manufactured by TSMC. It’s a similar method used by most chip makers. Qualcomm confirms that its semiconductor manufacturing partners include TSMC, Samsung, SMIC and Global Foundries Inc.
“As mobile technologies continue to benefit society in new and often unexpected ways, it is important that companies like ours collaborate with key stakeholders to foster sustainability throughout the supply chain,” explains Kevin Caffey, Vice President for Quality and Reliability at Qualcomm, in a statement.
I must share the analysis by Counterpoint Research Analyst Adam Chang, in which he says: “In Q2 2024, the global foundry industry demonstrated resilience, with most of the growth primarily driven by robust AI demand and smartphone inventory restocking. Demand recovery across the semiconductor industry is progressing unevenly. While leading-edge applications such as AI semiconductors are experiencing strong growth, traditional semiconductors are recovering more slowly.”
The question therefore is – which industries will help immediate recovery and the next phase of growth, including India’s semiconductor foundry capacity?
It is important to list the markets that are the biggest chip consumers worldwide. Smartphones? Of course. PCs, laptops and computing devices as a whole? Yes. There’s more. Consumer electronics as a broader space, industrial electronic equipment, servers as well as data centres, storage, wired and wireless infrastructure as well as automotive applications, will drive the revenues for chip makers as well as foundries.
The latest numbers by research firm Statista indicate that by the end of next year, revenue from just smartphone manufacturing will be to the tune of $146 billion, up from $104 billion this year. Personal computing will clock a jump from $89 billion in revenue now, to $107 billion by the end of 2025. With AI’s prominence as it is and will be in times to come, the data estimates data centres, servers and storage requirements will be to the tune of $136 billion – up from $78 billion at this time. At every point, we’ll rely on foundry capacity, semiconductors and chips.
Would it be hyperbole to say that hidden within a complex chip circuitry, is the destiny of the human race? Perhaps not.
Vishal Mathur is the technology editor for the Hindustan Times. Tech Tonic is a weekly column that looks at the impact of personal technology on the way we live, and vice-versa. The views expressed are personal.
