The pandemic, which led to the downtime of the leading manufacturers of microchips and semiconductor products, as well as the increased demand for consumer electronics due to the transition to remote operation and training, led to a global crisis of the world economy.

High competition among various industries, intensified by trade wars and sanctions between the United States and China, delayed demand and supply disruptions due to widespread lockdowns, have led to a situation where the available capacities cannot cope with increasing demand.
According to Asset Zhakupbekov, analyst of the Kazakhstan Center for Industry and Export "QazIndustry" JSC of the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan, the shortage of microchips and semiconductor products affected not only the IT, electronic and automotive industries, but also such industries as mechanical engineering, aviation, medicine, etc. Companies that own their own semiconductor manufacturing plants face supply restrictions from their own suppliers of materials and equipment.

Semiconductor manufacturers have reoriented their supply chains to the consumer electronics and medical sectors, which have rapidly grown into a pandemic.

In turn, US sanctions and the emerging shortage prompted Huawei and other Chinese companies to form their stocks, which in turn temporarily increased demand.

"The current conjuncture of the semiconductor market in the world may affect the implementation of technological production in Kazakhstan, in particular household appliances," Asset Zhakupbekov notes.

Currently, Taiwan and South Korea are leaders in the production of semiconductor products. So, their joint share in the market of processor chips is about 83%, and memory chips-70%.

For reference: the leader in the semiconductor manufacturing market is the Taiwanese company TSMS (Taiwan Semiconductor Manufacturing Company). Today, TSMS occupies 54% of the semiconductor market. Its closest competitor, South Korean Samsung Electronics — has 17%.
The long-term trend towards localization of microchip production in certain regions of the world has played a cruel joke with their large consumers. The current situation with the supply of semiconductors has forced many countries of the world to think about establishing their own production.

Thus, the chief executive officers of American chip manufacturing companies, including Intel Corp., Qualcomm Inc. and Advanced Micro Devices Inc., called on US President Joe Biden to support domestic production and not let the country lose its advantage in innovation. In its appeal, the Semiconductor Industry Association proposes to include "substantial financing of incentives for semiconductor production in the form of grants and/or tax credits" in the incentive package of his administration. The US plans to allocate subsidies in the amount of $54 billion to stimulate the development of local semiconductor production. TSMC is already building a plant in Arizona, and Intel and Samsung Electronics have announced plans to start construction in the near future.

At the same time, to reduce dependence on external suppliers, the European Commission plans to create a European microelectronics alliance, which will probably include the largest European chip manufacturers, as well as automakers and telecommunications companies. The EU is considering building an advanced semiconductor manufacturing plant in Europe to avoid relying on the US and Asia for the technologies underlying some of its core industries. At the end of the 2020 17 EU countries signed a Declaration in which they committed to invest in the industry up to €145 billion and spend it, in particular, the development of processors to 2 nanometers (nm).

Reference: a nanometer is the density of transistors on a single plot, the smaller the number is in the marking process, the greater the number of transistors, and hence greater computing power will be given to the user.
According to the information of the Kazakhstan Industry and Export Center "QazIndustry "JSC of the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan, China plans to meet its needs for equipment for the production of semiconductors by 70% by 2025 at the expense of its own capacities. The remaining demand will be covered by imports, which will have to decrease annually. To ensure independence from US technologies, China plans to invest $1.4 trillion in high technologies by 2025.

In addition, China is systematically poaching valuable personnel. For example, two Chinese companies: Quanxin Integrated Circuit Manufacturing (QXIC) and Wuhan Hongxin Semiconductor Manufacturing Co (HSMC) have hired more than 100 experienced engineers and managers from TSMC, offering them amazing service packages that are 2-2.5 times higher than the total annual salary of TSMC,and bonuses.

China has created a specialized fund to accumulate funds that will be used for the implementation of the "semiconductor import substitution" program. It is called - "Big Fund" (Big Fund). First of all, it will be used to finance such suppliers of equipment for the production of electronics as Naura, Advanced Micro-Fabrication Equipment, Hwatsing, ACM Research, Mattson Technology and Shanghai Micro Electronics Equipment. These companies are critically important for achieving the first goal of China's plan — the deployment of production for the production of chips according to the 28-nm process technology.

It is worth noting that if China is one of the leaders directly in the production of semiconductors, then in terms of technologies and equipment necessary for the production of semiconductors, the main achievements belong to the United States, Japan, South Korea or the EU. Chinese enterprises can provide only 20% of the necessary equipment and technologies necessary for the development of 28-nm. Everything else must be imported.

For example, the Dutch company ASML is the largest manufacturer of photolithographic systems for the microelectronic industry. They are based on American technology. It supplies lithographic equipment to most manufacturers of semiconductor components, including TSMS and Samsung Electronics.
Today, the global semiconductor industry is a production mechanism divided between several advanced countries of the world that invest huge amounts of money in the production and development of technologies.

The United States, the EU, China, South Korea and Japan have long and firmly occupied leading positions in the semiconductor market.

Given the small volume of consumption, Russia is supplied with advanced components on a residual basis. The global shortage of semiconductor products may lead to the fact that manufacturers will prefer larger markets.

Automakers, due to their insignificant share in the total sales of semiconductor products, were at the end of the queue among customers. The global auto industry buys $37 billion worth of semiconductors annually, while Apple alone spends about $56 billion annually on semiconductors.

As part of preventing this scenario, Russia is considering the possibility of localizing the production of semiconductors on its territory.

At the beginning of 2020, Russia approved the strategy for the development of the electronic industry until 2030. The program sets a goal to establish the production of microchips with a "thickness" of 65 to 7 and even 5 nm by 2030. The government plans to allocate about 266 billion rubles to solve these tasks by 2024.

For reference: today in Russia, mainly 130-nm semiconductors are produced. However, Baikal Electronics has long mastered the 28-nm, but the casting is ordered in Taiwan.

According to Asset Zhakupbekov, analyst of JSC "Kazakhstan Center for Industry and Export "QazIndustry" of the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan, the localization of production in certain parts of the world has led to the dependence of many countries on foreign supplies. It is expected that many countries will begin to develop their own production of semiconductor components by investing in the development of their own production and advanced research.

"It is important to note the fact that launching a new modern high-tech production of microchips from scratch is an extremely expensive and technically difficult task. To create its own production of semiconductors, it is necessary to invite a large multinational company with advanced equipment and technologies, engineers and specialists in the field of creating semiconductors and which can afford large financial investments, for example Samsung," QazIndustry notes.

For reference: so, according to the estimates of the Semiconductor Industry Association (SIA) in 2020, the average cost of a plant at 14-16 nm was estimated at $13 billion, at 10 nm-at $15 billion, at 7 nm-at $18 billion, at 5 nm-at $20 billion. At the same time, investments in research in the field of electronics are also growing at a rapid pace. To date, the volume of research and development in the field of semiconductors is second only to pharmaceuticals.
In particular, TSMS has planned about $20 billion of capital expenditures for the development of advanced lithographic technologies for 2021, most of which will be on 3-nm technology.

Taking into account the financial injections necessary for the organization of production, the cooperation of several countries is one of the most effective and cost-effective ways to enter the semiconductor market.