‘Fab 4' chip group

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.

• 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.

• 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 asemiconductor 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.

• 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) schemeto 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 with a total financial outlay of Rs 76,000 crore under the aegis of the Ministry of Electronics and IT (MeitY)
• 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.