Hello, hope you are having a great Sunday. This week our newsletter brings to light the reasons behind the ongoing Semiconductor crisis and the whole data protection debacle.
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All You Need To Know About The Semiconductor Crisis
The semiconductor chips crisis which came into the limelight in 2021, is still persisting, though it was expected to improve in 2022. A range of events like the Ukraine-Russia War and the continuation of the pandemic among others further aggravated the chip crisis
Why is chip shortage a matter of concern?
A semiconductor chip is an electric circuit with many components like transistors and wiring formed on a semiconductor wafer. They are the foundation of everything digital in today’s world – from Artificial Intelligence, 5G, quantum computing and automobiles, to consumer electronics, healthcare and everything beyond.
Manufacturing these chips is a complex process that takes over three months and they heavily depend upon raw materials and spare parts from different parts of the world. Amidst strained international relations, the demand for chips exceeding the supply has become a critical matter of concern.
Reasons that led to the Semiconductor Crisis
#1 The COVID-19 Pandemic
A major contributor to the chip shortage has been the pandemic. Office work, social interaction, and entertainment have all shifted to screens. COVID-19 has forced a significant portion of the population indoors, leading to a sudden increase in the demand for consumer electronics like laptops, phones, and gaming consoles.
#2 Cryptocurrency Mining
The sudden popularity of cryptocurrencies has also led to more mining operations coming up across the world, requiring more processing units.
#3 Flawed calculations by automobile manufacturers
Carmakers lowered their chip orders at the start of the pandemic, assuming that consumers wouldn't be interested in buying new vehicles, leading to a miscalculated drop in supply.
#4 Diplomatic relations leading to global supply chain disruptions
Tense relations between the United States (US) and China have played a part in throttling supply since China is one of the biggest manufacturers of chips.
This year, the Ukraine-Russia War due to the supply chain disruptions reduced the availability of raw materials needed for chip fabrication.
And lastly, researchers are speculating that the China-Taiwan standoff might further affect the global chip shortage as Taiwan is an important pivot in the global chip supply chain manufacturing which will impact 80-90% of the world’s advanced semiconductor needs.
Plan of Action by the Government of India
India has approved a production-linked incentive (PLI) scheme worth Rs 76,000 crore (roughly $10 billion) to attract global chipmakers to set up FABs (microchip manufacturing plants) in the country.
Under this scheme, the government will extend financial support of up to 50 per cent of a project's cost to eligible display and semiconductor makers, offsetting the high costs of setting up a plant.
(Sources: The Quint, Economic Times, Money Control)
The Personal Data Protection Bill has been withdrawn
The Personal Data Protection Bill was proposed by the Government of India to protect individuals’ right to privacy by regulating, collecting, moving, and processing data that is personal, or which can identify the individual.
Despite the long and arduous legislative and consultation process since 2018, the Bill was withdrawn on 3rd August 2022.
Here, we look into why data protection is important and why has the bill been withdrawn.
Why is Data Protection important?
Over the last two decades presence of data has grown exponentially around the world. As the amount of data stored and created has increased, so have the importance and concerns regarding the privacy and protection of data
For this, the existence of data protection laws gives security to the people dealing with sensitive information and prevents the information of an organization from fraudulent activities, hacking, phishing, and identity theft.
Why has the bill been withdrawn?
Having been in the works since 2018, the data protection bill was reviewed and recommendations were submitted by the Joint Parliamentary Committee in November 2021.
The bill was opposed by the tech giants and experts who stated that the bill had loopholes to be implemented effectively and be beneficial for both users and companies.
Coming to the present, the Union IT Minister Ashwini Vaishnav explained the reason behind the withdrawal of the Bill:
The Personal Data Protection Bill, 2019 was deliberated in great detail by the Joint Committee of Parliament. 81 amendments were proposed and 12 recommendations were made toward a comprehensive legal framework for the digital ecosystem. Considering the report of the JCP, a comprehensive legal framework is being worked upon. Hence, in the circumstances, it is proposed to withdraw ‘The Personal Data Protection Bill, 2019 and present a new Bill that fits into the comprehensive legal framework.
Why did the bill face criticism?
The PDP Bill was criticised by the tech giants and private entities that opposed the provision of data localisation which they felt was stringent.
(Data localization is the practice of keeping data within the region it originated from. For example, if an organization collects data in India they store it in India only, rather than transferring it to another country for processing.)
Moreover, tech giants like Google and Meta criticised the new recommendations of JPC in the draft bill as the provision in the bill classifies social media platforms as publishers and the onus for user-generated content will be on internet companies which can further lead to the banning of the platform or a lawsuit.
Experts Say
Kazim Rizvi, Founding Director, The Dialogue, a New Delhi-based think tank,
The withdrawal of the “Data Protection Bill 2021 is the right move as it had various shortcomings and concerns, notably around the lack of independence of the Data Protection Authority (DPA), restrictions on cross-border data flow, the inclusion of non-personal data and broad exemptions to the executive for data processing.
Privacy rights organisation Internet Freedom Foundation said more needs to be done to hold the Data Protection Authority accountable, furthermore, the utilisation of citizen data by the Indian State also must be kept in check.