Context: The U.S.-led "Fab 4" semiconductor alliance of Taiwan, the United States, Japan and South Korea held its first video meeting of senior officials to focus on supply chain resilience.

Background

• The United States last September convened the first meeting of the working group, colloquially called "Fab 4" or "Chip 4", to discuss how to strengthen the semiconductor supply chain, after a global chip crunch caused by the COVID-19 pandemic.

About

• The meeting discussed setting up an early warning system to ensure a steady chip supply.

• The Taiwan representatives suggested that the Fab 4 should exchange information on different parts of the supply chain as early as possible.

• Taiwan and South Korea will handle manufacturing issues, Japan will report on materials issues and the US will concentrate on market issues.

What is Fab 4 chip group?

• It is a semiconductor alliance of Taiwan, the United States, Japan and South Korea.

• The "Fab" in the name refers to a shorthand industry expression for the fabrication plants where chips, used in everything from fridges and smartphones to fighter jets, are made.

• The group's members are home to the world's largest contract chip maker Taiwan Semiconductor Manufacturing Co Ltd (2330.TW), South Korean memory chip giants.

• Samsung Electronics Co Ltd (005930.KS) and SK Hynix (000660.KS), and key Japanese suppliers of semiconductor materials and equipment.

Significance

• As important members of the Indo-Pacific region, the countries also play a key role in the global semiconductor industry, and have deep economic and trade relations with countries in the region.

Why is semiconductor industry important?

• A semiconductor is a substance that has specific electrical properties that enable it to serve as a foundation for computers and other electronic devices.

• Semiconductor Chips: Semiconductors are materials which have conductivity between conductors and insulators. They can be pure elements, silicon or germanium or compounds; gallium, arsenide or cadmium selenide.

• They are the basic building blocks that serve as the heart and brain of all modern electronics and information and communications technology products.

• These chips are now an integral part of contemporary automobiles, household gadgets and essential medical devices such as ECG machines.

Government Initiatives in India

• In 2021:10 billion dollar production-linked incentive (PLI) scheme to encourage semiconductor and display manufacturing in the country.

• Fiscal support for a design-linked initiative (DLI) scheme to drive global and domestic investment related to design software, IP rights etc.

• Modifications in “Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India: The Union Cabinet has approved a uniform incentive of 50% of the projectcost for setting up semiconductor, display and compound semiconductor fabrication units.

India Semiconductor Mission (ISM)”will be set up

• Scheme for setting up of Compound Semiconductors facilities.

• Vedanta and Taiwanese chipmaker Foxconnwill set up a Rs 1,54,000 crore semiconductor plant in Gujarat.