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Current Affairs

Tatas enter semiconductor manufacturing

Date: 16 August 2021 Tags: Miscellaneous

Issue

Conglomerate Tata group is now planning to venture into semiconductor manufacturing. This is set to be the latest venture of the Indian giant.

 

Background

Tata has already started manufacturing high-tech electronics and will foray into semiconductor sector owing to an opportunity provided by high demands.

 

Details

  • Global semiconductor and chip supply chain has suffered immensely due to the pandemic induced lockdown. The demand is increasing but supply is still unable to fulfill it.

  • The first steps were taken when it bought a stake in Tejas Networks, which is involved in manufacturing telecom equipments.

  • Tata has been eyeing the e-commerce space, especially in consumable goods sector. It has bought stakes in Big Basket, CureFit and 1mg.

 

Significance

  • Semiconductor chips are important components of technological products like computers and smartphones. In addition, new-age automobiles have been increasingly functioning on semiconductor chips.

  • Due to the shortage of chips, many automobile companies have delayed delivery of new vehicles and also pushed new vehicle launches.

  • The new sector would provide Tata the opportunity to explore market not only in India but all across the world. In addition, it would be useful for its own ventures such as Tata powers and Tata automobiles.

 

Global semiconductor chip shortage

  • Large manufacturing companies in Taiwan and Korea have shut down due to pandemic. This has created pile-up of order which existing companies cannot fulfill.

  • In addition, the demand for electronic goods such as computer and smartphones grew tremendously due to the pandemic-induced lockdown. This created demand-supply mismatch.

  • The shortage event was observed last year immediately after the first wave and is expected to continue until 2022.

  • The situation has forced many electronics manufacturers to diversify their supply chain and remove dependency. Any new manufacturer will definitely have an opportunity to prosper.