Chip wars: How Nigeria can take advantage of the $1 trillion industry

The use of most silica sand deposits in construction and gaps in human capital development mean Nigeria will be totally lost in the US-China chip war by 2023.

But if Africa’s most populous country with many development challenges changes course, it could be one of the main beneficiaries of the huge investment earmarked for the semiconductor market. The global semiconductor market reached a valuation of $555.9 billion in 2021 and is projected to reach $1,033.5 billion by 2031, with a compound annual growth rate of 6.21% between 2022 and 2031.

Chip is the fundamental ingredient in today’s modern world. It has to be present in almost all technological devices for them to work efficiently. It powers mobile devices from 5G-enabled smartphones to feature phones, the transistor radio set used by millions in Northern Nigeria, the television in many homes, and various technological devices used by people today.

While no country can control the entire chip-making process due to the complexity and outsized value chain, countries like the US are focused on getting as much of a stake as possible to avoid becoming overly dependent on others.

The US considers its participation in the manufacture of chips critical; considers it a matter of national security.

Chips are increasingly being used to produce advanced weapons. For example, in 2022, China launched a hypersonic glide vehicle built with advanced chips in an exercise near Taiwan, and Russia used hypersonics for the first time in the war in Ukraine.

A major US concern is that China controls 80 percent of the world’s refining capacity for rare-earth materials, which are essential for making military products like parts for fighter jets and components for everyday consumer devices. such as batteries and screens. Restricting exports could give China some leverage.

Taiwan’s position is also an important issue for China and the United States. Taiwanese companies dominate global semiconductor production. Taiwan Semiconductor Manufacturing Company (TSMC) is responsible for about 50 percent of the world’s semiconductor chip production. By contrast, no single country alone accounts for more than 18.5 percent of world oil production.

China continues to maintain that Taiwan is part of its sovereign territory. But Taiwan sees itself as separate from mainland China, with its own constitution and democratically elected leaders. The United States supports an independent Taiwan, viewing it as an ally much to the dismay of China, which continues to threaten to reunify Taiwan.

In a move to curtail China’s growing power, the US has in recent months instituted the most sweeping restrictions on what chips can be sold to China and who can work for Chinese companies. At the same time, it has targeted the supply side of the chip industry, introducing generous federal subsidies to lure manufacturing back to the US Other governments in Europe and Asia that are home to major chip companies have introduced policies similar to maintain their own positions in the industry.

The result of the new US policy is an increase in investment in chip manufacturing, which is expected to pass through the value chain. The chip industry cannot function efficiently without a well-motivated value chain.

The US committed $52 billion to semiconductor research and manufacturing in 2022 with the CHIPS and Science Act. Of that, $39 billion will be used to subsidize the construction of factories nationwide. Companies will be able to officially apply for that funding in February 2023, and the awards will be announced on a rolling basis.

Where could Nigeria enter

Computer chips or chips are a vital part of any computer. It was the invention of the computer chip that made it possible for many people around the world and in Nigeria to own a computer. A primary component for making chips is silicon dioxide, a naturally occurring semiconductor that can transmit or insulate electricity.

Silicon dioxide is found in high concentrations around beaches. That is why Nigerian states like Rivers, Cross River and Lagos have large deposits of silica sands.

Awareness of the huge deposits of silica as a sand resource in Nigeria and its industrial potential has been raised by the COOU Journal of Physical Sciences Commodity Research and Development Center, Nigerian Mining Corporation and other government agencies. However, despite the availability of large silica sand deposits in the country, very little use is made of the sand except for traditional uses in glass and refractory products, according to Chukwu Philomena, a minerals researcher.

There are many other elements that can be used in chip making such as sodium, rubidium, iodine, and cesium. Others include germanium, gallium arsenide, oxygen, and boron. These elements are widely used for semiconductors. Some of them are used in the different stages of silicon processing. For example, oxygen is used to make layers of insulators, while aluminum and gold are used to make connections.

Also Read: MediaTek Introduces Latest Chipset To Power 5G Smartphones

In the past two years, disruptions in the supply chain have caused a shortage of semiconductors in the market. The resurgence and escalation of coronations in China has affected technology companies such as Apple, Tesla, OPPO and many others that depend on the Asian giant for the supply of some parts. China is one of the largest suppliers of silica sand used in chip manufacturing. This presents opportunities for countries like Nigeria to take advantage of.

The semiconductor market is also in dire need of talent, a resource Nigeria is never short of. With an estimated two million direct employees worldwide in 2021, Deloitte predicts that more than one million additional skilled workers will be needed by 2030, which equates to more than 100,000 per year.

“And the shortage of semiconductor workers shows signs of getting even worse. The current global economic environment and ongoing semiconductor supply chain issues add to the challenges facing semiconductor companies,” Deloitte said.

Another Accenture report released in January finds that most industry executives view talent pipelines as a far more important issue than investment.

“It’s also a bigger problem than geopolitics,” said Syed Alam, Accenture’s global high-tech leader. “That’s one of the findings that I find very interesting.”

The shortage hits the US hardest, given its big push to develop domestic manufacturing, underscored by the Chips and Science Act signed into law by President Joseph Biden.

The European Union, which also recently signed the Token Law, is also facing a massive talent shortage. The Chip Law will strengthen the region’s competitiveness and double its current share of the semiconductor market to 20 percent by 2030. The European microelectronics sector directly accounts for 200,000 and indirectly 1 million highly-skilled jobs, and the demand for new skills is constantly expanding.

Countries like India are taking advantage of this opportunity. India has more than 30,000 semiconductor engineers across the globe. Deloitte said the industry employs different skill sets and more will be needed over the next decade. The new manufacturing plants being built by companies in Europe, the UK and the US would need electricians, pipefitters, welders, thousands of other graduate electrical engineers to design chips and the tools that make them; more engineers of various kinds in the factories themselves, but also operators and technicians.

While each of these job categories would require specific training and educational needs, the number of students currently in semiconductor-focused programs (for example, college students in semiconductor design and manufacturing) has declined.