Previous Editions

Pakistan’s large copper reserves help attract FDI in different projects Govt should strive to promote electric vehicles in future development plans

In view of climate change issues and the demand for reducing carbon footprint, one of the biggest challenge that companies are facing these days is whether supply chains will be able to keep up amid the growing demand for electric vehicles and consumer appliances. Today, companies need to review critical areas to address concerns about supply chain disruptions along resulting shortages. A major example is that of semiconductor industry has a flourishing global supply chain status but in the near future, countries will be on the brink of waging wars over the shortage of semiconductors.

Semiconductors are used in almost all ‘smart’ products that consumers buy these days and their demand is increasing day by day. They are the foundation of the advanced technologies that we all rely on. From cell phones, laptops and washing machines to refrigerators, cars and airplanes. This is highlighted by global semiconductor sales increasing manifolds in 2023, according to the Semiconductor Industry Association. The chip shortages are expected to cause widespread shortages of everything, from cars to electronics to medical devices to technology and networking equipment. Companies are investing billions to ramp up their chip output but it will take another two to five years to overcome the shortages.

Wide-ranging prospect

The semiconductor industry is widespread and diversified. No one country or company has true independence in its value chain. It has different inputs and the companies supplying the various ingredients are spread with their businesses across the world. The highly engineered tools needed for manufacturing semiconductors are sourced from various parts of the world. The manufacturing process integrates hundreds and thousands of people and processes with different skill sets. In the next decade, the industry as a whole would need to incur R&D and capital expenditure of about $3 trillion to meet the fast-growing demand for semiconductors from all sectors of the global economy. There is a growing demand for increasingly sophisticated chips to power transformative applications such as Artificial Intelligence, the Internet of Things (IoT) or autonomous vehicles.

The shortage of semiconductors shows that organisations, which are connected to this industry need to collaborate and innovate the materials, design and manufacturing process to not only meet the rising demand but also increase the quality of existing products.

Challenges such as the geographic concentration of some critical spokes of the supply chain and geopolitical friction among nations must be addressed to make the semiconductor global chain more resilient. Shortages of semiconductors that have been hurting manufacturers of automobiles and other products illustrate the need for companies to ensure that their supply chains are flexible. These shortages have underscored the value of understanding and mitigating supply chain risks and developing robust strategies for overcoming the unthinkable.

Copper is the new gold

Pakistan has the 7th largest copper reserves (approx. 16,000 million tonnes) in the world. Since the semiconductor industry is dependent on the supply of copper, Pakistan could use these reserves to its advantage by inviting FDI in Reko Diq projects under SIFC. Moreover, E-Vehicle technology is getting popular around the globe at an accelerated pace as electric vehicles are much simpler as compared to the existing vehicles as regards electrical/mechanical parts, maintenance, environment-friendly and do not require fuel/lubricants thus economical on operational cost. Besides, they will be saving foreign exchange on account of fuel import for the country.

Indeed, market appeal for electric vehicles is increasing immensely. Amid fear of a further rise in fuel prices, people are looking for transportation alternatives and are slowly and gradually inclining towards electric vehicles. Presently, the options available are limited and costly but as more new players are entering the market, the environment is getting more conducive. A lot of companies have come up with their own variants of 2-3 wheelers. The government should strive to promote electric vehicles in the development plans of the country with the help of liberal and attractive incentives to attract investment, which will put Pakistan on the renewable energy map of the world.