Global Geopolitics: The Semiconductor Supply Chain
- Market Context: The global semiconductor industry is projected to exceed $1 trillion in annual revenue by 2030, fueling advancements in AI, defense technology, and 5G/6G infrastructure.
- Geographic Concentration:
- Advanced Logic Chips: Over 90% of the world’s most advanced sub-10nm chips are currently manufactured in Taiwan (predominantly by TSMC).
- Vulnerability: This concentration poses a significant supply chain risk, sensitive to geopolitical tension (e.g., Taiwan Strait conflict) and environmental hazards.
- Strategic Policy Responses:
| Initiative | Region/Country | Primary Goal | Key Mechanism/Budget |
|---|---|---|---|
| CHIPS and Science Act | USA | Reshore critical manufacturing capabilities. | $52.7 billion in subsidies for domestic fabrication plants (fabs). |
| European Chips Act | EU | Double regional market share to 20% by 2030. | €43 billion public/private funding mechanism. |
| Semicon India Programme | India | Establish a robust semiconductor ecosystem. | Focus on design-linked incentives (DLI) and Assembly, Testing, Marking, and Packaging (ATMP) units. |
- Export Controls: Recent measures (e.g., US restrictions on exporting advanced GPU chips and related manufacturing equipment) aim to limit technological parity with strategic competitors in critical AI development.
Digital Public Infrastructure (DPI) and Financial Inclusion
- Definition: DPI refers to interoperable, foundational technology layers (Identity, Payments, Data Exchange) that allow governments and the private sector to deliver services at scale.
- Key Components (The India Stack Model):
- Identity Layer: Biometric identity systems (e.g., Aadhar) providing universal identification.
- Payments Layer: Instantaneous, low-cost payment mechanisms (e.g., Unified Payments Interface - UPI).
- Data Exchange Layer: Secure, consent-based data sharing infrastructure (e.g., DigiLocker, Account Aggregator framework).
- Economic Impact of UPI:
- Achieved a penetration rate processing over 10 billion transactions monthly (peak 2023 data).
- Reduced transaction costs significantly compared to traditional banking and credit card networks.
- Global Expansion:
- India is promoting the adoption of its DPI model—termed 'India Stack Global'—through bilateral agreements and collaboration with multilateral institutions.
- Target countries primarily include emerging economies in Southeast Asia and Africa seeking rapid financial inclusion solutions.
- Challenges in Deployment:
- Ensuring robust data privacy frameworks (data residency, consent architecture).
- Bridging the digital literacy gap to ensure equitable access among diverse populations.