Introduction:
In the rapidly evolving landscape of the 21st century, the tides of change have ushered in a new era defined by technological innovation and interconnectedness.
As societies increasingly digitize, semiconductors have emerged as the unsung heroes powering this transformation.
A disruption to the supply of semiconductors could have a more significant impact on the global economy than a disruption to the supply of oil. This is because semiconductors are essential for the production of many essential products.
For example, a shortage of semiconductors could lead to a shortage of cars, computers, and medical devices.
The importance of semiconductors is only going to grow in the future.
As the world becomes increasingly digitized, the demand for semiconductors will continue to grow. This makes semiconductors a strategic asset that countries will compete to control.
In addition to the reasons mentioned above, semiconductors are also becoming increasingly important for national security.
Modern warfare relies on advanced technologies, such as radar, missiles, and drones, which all require semiconductors.
A country that does not have access to semiconductors could be at a significant disadvantage in a conflict.
While oil has undoubtedly played a significant role in shaping economies, it’s time to recognize that semiconductors have taken center stage, owing to their pervasive influence across industries and their irreplaceable role in shaping our future.
Ubiquitous Range of Applications:
The impact of semiconductors is felt across a wide spectrum of products that touch every aspect of our lives.
Smartphones, computers, medical equipment, transportation systems, industrial machinery—these are just a few examples of the countless devices reliant on semiconductors.
Take the healthcare sector, for instance, where semiconductors power advanced medical imaging technologies like positron emission tomography (PET) scanners, enabling early and accurate disease detection.
Read more: How Chip Shortage Is The Most Important Event of Our Lifetime?
Semiconductor’s know how is complicated
When it comes to semiconductors, it’s not just about the chips themselves, but a mix of different things like how they’re made, research, ways of managing, and other types of expertise.
This knowledge is usually in specific companies or skilled people, and it’s not easy to move it from one country to another.
It’s not only about sending technology elsewhere.
The combination of knowledge, technology, research, and processes has made the semiconductor industry successful.
If even one part is missing, it could cause problems in different countries.
Conversely, the extraction of oil can occur across numerous global locations, showcasing a comparatively wider geographical distribution.
In contrast, while oil extraction involves complex techniques, it doesn’t demand the same precision or technical finesse.
Semiconductor is future
The digital revolution has propelled the demand for semiconductors to unprecedented heights.
As the Internet of Things (IoT) proliferates and artificial intelligence (AI) takes center stage, the need for powerful computing capabilities continues to grow.
While oil demand is also on the rise, its growth rate is tempered by the emergence of renewable energy sources and a growing focus on energy efficiency.
Semiconductor is NOT diversified geographically
If there’s a lack of oil from a region like West Asia due to a conflict, we could make up for it by getting oil from places like Russia, Venezuela, or other countries in the Organization of the Petroleum Exporting Countries (OPEC).
Similarly, when Ukraine couldn’t export wheat because Russia blocked its ports, India took on the role of supplying grains to several countries instead.
On the other hand, Semiconductor production is concentrated in a handful of countries, predominantly in East Asia. Taiwan, South Korea, and China dominate the landscape, creating a unique set of economic and geopolitical dynamics.
In contrast, oil reserves are more widely distributed across regions, reducing the vulnerability of supply chains to geopolitical tensions.
Semiconductor is Universal Jewel
A disruption in semiconductor supply chains can send shockwaves across multiple industries.
The automotive sector exemplifies this vulnerability. Modern vehicles incorporate semiconductors for engine management, infotainment systems, and advanced driver-assistance features.
A shortage can lead to production halts, impacting jobs and consumer satisfaction on a massive scale.
Examples:
- The 2020 semiconductor shortage caused several automakers to halt production, revealing the intricate interdependence between industries and the fragility of global supply chains.
Future Growth Trajectory and National Security:
The trajectory of semiconductor importance is decidedly upward. With the advent of 5G networks, quantum computing, and AI, the demand for semiconductors is poised to skyrocket.
Moreover, these chips underpin modern defense systems, making them indispensable for national security.
Countries that lack a robust semiconductor industry risk becoming technologically disadvantaged.
People are focusing more on semiconductors and trying to keep these technologies in their own countries, which is sometimes called “technological nationalism.”
This is causing a divide between two major countries in terms of technology – China and the USA.
Other countries are trying to figure out how to deal with this situation.
Since everything is becoming digital in the world, countries want to make sure they have control over different parts of making semiconductors.
For example, in 2011, a big earthquake and tsunami in Japan disrupted the supply of a key ingredient used in making chips clean. This led to a shortage of materials and even affected car and truck manufacturing in the US.
Right now, there’s a worldwide shortage of chips, which was made worse by COVID-19. This happened because different industries all need these chips, and there aren’t enough factories to make them.
Examples:
- Nations like the United States and the European Union have recognized the strategic importance of semiconductors and have initiated efforts to bolster domestic production for reasons of national security.
Conclusion:
As societies transition into a new era of digital empowerment, semiconductors have emerged as the true bedrock of modern progress.
Their exceptional range of applications, intricate production processes, surging demand, concentrated production hubs, substantial economic implications, and integral role in national security all solidify their position as the driving force behind our technologically connected world.
While oil has held its own as a critical resource, the undeniable truth is that semiconductors have surpassed it in terms of importance and ubiquity.
As our dependency on technology deepens, semiconductors will continue to be the linchpin of our evolving civilization.
