China doubles growth in chip production in 2021 . . .
According to a National Bureau of Statistics of China (NBSC) report released on Monday, China produced 359.4 billion integrated circuits (ICs) in 2021, equivalent to a 33.3 per cent year-on-year increase and doubling the 16.2 per cent increase in 2020. ICs are chips fabricated from semiconductor materials like silicon and are critical components in electronic products such as computers, smartphones, and vehicles. NBSC’s data did not specify the production breakdown by domestic or foreign-owned companies, nor the type of ICs produced. China is the world’s largest chip consumer but has yet to become a major producer of the most advanced chips. Nonetheless, the significant output surge indicates the effectiveness in Beijing’s broad drive for tech independence since 2020 – including government subsidies, tax cuts, and preferential policies that induce private investment.
Japan’s production push . . .
To boost domestic self-sufficiency in chip production, Japan also plans to establish subsidy programs for companies developing chips and other strategic products needed for 5G and other technologies. Tokyo’s decision comes as China-U.S. trade tensions and the pandemic disrupted Japanese supply chains of critical goods like medical masks and vaccines, highlighting the country’s overreliance on Chinese manufacturing chains. The subsidy plans also come on the heels of Japan’s allocation of C$6.5 billion in 2021 to support the semiconductor industry and chipmakers. The government plans to invest more than 60 per cent of the funds in a new factory built by the Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker.
Enter India . . .
The pandemic-induced chip shortage has held up global supply chains, particularly impacting automotive industries worldwide. For instance, Toyota announced a 40 per cent cut in vehicle production in 2021 due to chip shortages. Amid the shortage, India is also jumping into chipmaking. In December it announced financial incentives to start this month and totaling C$12.7 billion for chip manufacturers to set up production in the country. Prime Minister Narendra Modi’s plan goes beyond facilitating the expensive construction of IC factories; it supports the whole chip production chain from design to packaging and shipping.