Revive hardware sector

Chip Shortage

By Shivaji Sarkar

The world is anodd place. The way to global recovery sometimes is disrupted by an invisible virus and as it tries to come out of it by a small computer chip. This is thawing both the Indian and global industry. The sudden shortage of semi-conductor due to production stress shifting has put the world giants on a tricky slowdown.
A whole array of products – cars, washing machines, wheel chairs or medical and diagnostic instruments depend on semi-conductors. The shortage hits even the disabled-using a semi-conductor controlled wheel chair. The disruption is said to continue for a year.
India is no exception, starting from cars and to the medical and personal computer sector. It is hitting an economy trying to struggle back in a post-pandemic situation.It impacts car production already dislocated due to campaign to junk fine working ten-year-old cars or even life saving medical products.
Globally many products are in short supply. The chips that are in short supply perform various functions in modern products, and these are often more than one in a single device. Many electric and electronic hardware firms despite having orders are unable to complete the production cycle.
The automobile sector accounts for about 10 per cent of the overall demand, with the rest coming from the electronic appliances and gadget industry, such as mobile phones and laptops, among others. And who is not suffering from Jaguar to Hyundai, Ford, Maruti , gaming industry and entertainmentand an array of others. Many of these industries are on a halt. Even the smartphone industry is hit and can lead large groups such as Apple to a crisis.
It is difficult to fathom the losses. Production is being delayed, inventories and debt burden at factories are growing. This may lead to not only delay but the consequent higher interest repayments can cause sharp price rise in a world pestered by severe inflation. Banks are also hit and may head for another Non Performing Assets (NPA) regime.
The chip production was hit hard during the pandemic as major industries remained closed and the chip makers looking for an alternative got into different areas, away from the core buyers – cars, airplanes and other high-end aerospace manufacturers, which shut down operations because of the pandemic. This had a ripple effect through the supply chain to semiconductor manufacturers, who reassigned production to the consumer electronics and computing industries, which had an upsurge in demand.
The rest was acerbated by the 5G technology dependent highly on several kinds of chips. Technology changes always may not be advancement. These can cause disruption too. This is what is happening in a world that is depending on only one kind of technology, which is either a control mechanism or useful in secondary system.
The technological monoculture has become a severe problem. The source materials are also not that immense that it can continue supply forever. The alternatives are not easy to find. Never in the past technology has been so dependent on one aspect. The older technology had room for creating easy alternatives, the new software and chip-based technologies get into glitches easily. It is time for the world to rethink for induction of multi-faceted technology options. The world now has less option for jugaad that used to come out with citizen initiatives.
Since there is lack of such avenues,getting out of the quagmire in an intellectual property controlled regime is becoming difficult. The lack of the chip is hitting the critical life-support systems, including those used in the ICU. The prices of ventilators, imaging machines, glucose, ECG, blood pressure monitors and pacemakers are rising.
The chips for the Indian medical technology makers are sourced from Indian vendors. But they import it from China, Taiwan and the United States. In the race for software driven IT industry, no one apparently focused on setting up of chip fabrication unit for decades in the country. The experts had always expressed concern over the rise of a secondary industry and taking the prime space in economy.
It is not just the consumer but an array of industry and electronics segments that are hit. The crisis of the life-saving industry has already led to shortage of patient monitors, ECGs and many other simple devices. But this was not easy to believe even a short while ago.
India had a computer hardware sector in 1990s. It had also a semi-expertoperated by self-trained parallel market. It was called the Nehru Place or Ghaffar Market (in the Capital) technology. These were ignored and allowed to die as imports appeared to be at less cost. This apart IPR type rules that has caused immense problems for India-like countries, were not contested with the vigour it needed. The industry is now blaming the government. It earlier did not approach the government and now it is clamouring for having an Indian atmanirbhar chip production. It may be a good suggestion, however, it takes decades to set up such facility.
As of now, be it the car, medical, security and many other critical areas, the chip shortage has added to prices manifold. It has also led to production losses. The Society of Indian Automobile Manufacturers(SIAM), car makers association, notes that the cumulative sales from April to August 2021, the passenger vehicle segment is still below the level of 2016-17, the two-wheeler segment is lower than the level of 2011-12, and the three-wheeler segment is behind by many years.
Sales of used cars may have gone up many times but for the silly bureaucratic and National Green Tribunal (NGT) initiated moves to scrap the cars. More the cars, more people remain employed. Similarly, if a hardware industry is propped up, IPR protection is given, the country would do better. Unless the silly annihilating scrapping system is reversed, India’s supposed middle class economy is headed for collapse.
India is preparing for a digital boom starting with education. This may not be easy as even the personal computer system is hit by the chip scarcity. Its prices and cost per student is rising. It is also to hit the small and large businesses.
The Narendra Modi government has an open mind. It must initiate a process on war-footing to revive the hardware sector and keep prices of electronic devices under check, contest the annihilating IPR rules and help the country usher in a regime, where all breathe freely, act together and lead India to a prime global position.—INFA