The African continent is beginning to position itself as a key player in the global semiconductor ecosystem.
According to a report on the World Economic Forum's website, the United States Trade and Development Agency recently announced a partnership with Kenya to promote the semiconductor manufacturing industry in this East African country, marking a long-awaited step for the African continent's integration into the global semiconductor supply chain.
This development signifies a critical moment for Kenya and the African continent, which is beginning to position itself as a key player in the global semiconductor ecosystem. However, this is just the first step in a larger game.
The African continent is rich in resources and has a booming economy, especially in East and West Africa, providing the United States and the "West" with opportunities to ensure critical supply chains and cultivate a vibrant new stage in the global semiconductor field. In the increasingly complex geopolitical landscape, doing so will also strengthen partnerships with the African continent.
The economies of Kenya, Nigeria, Rwanda, and Ghana provide particularly fertile ground for investment, innovation, and growth in the semiconductor manufacturing industry.
As billions of dollars pour into the national semiconductor market, these countries may become key hubs for a global network that requires resilience and adaptability, as seen by the United States, South Korea, China, and the European Union.
With the United States developing its semiconductor manufacturing capabilities domestically through historic direct investment in the entire supply chain project (investing $327 billion over the next 10 years), it also emphasizes strengthening coordination with friendly and allied global partners.Preparation and Resource Advantages
This collaboration will help to maximize the use of limited resources and capital, alleviate the instability of the supply chain, and promote the sharing of knowledge and information to foster innovation and development in semiconductor technology.
The report predicts that by the end of this century, the scale of the semiconductor industry will grow to 1 trillion US dollars. As the industry develops, its main dynamics are that enterprises prioritize the protection and strengthening of their supply chains. For example, such investments in India, Costa Rica, and Mexico show that it is possible to create a feedback loop in which manufacturing capabilities are improved, labor force development is stimulated, and innovation and continuous investment are encouraged.
Africa is also a potential beneficiary of such benefits. In the short term, Africa may not be able to manufacture semiconductors, but it can participate in supply chain activities such as testing, quality control, and programming. The evolving startup ecosystem (including incubators, accelerators, and co-working spaces) provides a network of early-stage enterprises and potential employees for these roles.
In addition, African expatriates also invest in these enterprises, such as Chiplab, which trains microchip designers, founded by Ola Fadiran, and eFabless, which simplifies chip design, founded by Mohamed Kassem.
It is estimated that Africa holds one-third of the key minerals required for semiconductor manufacturing, and without these minerals, quantum computers cannot be produced. Scandium, yttrium, lanthanum, and cerium are all elements used in semiconductors and are essential for every stage of chip production (from raw materials to design and manufacturing).
These key minerals are used in consumer electronics, computers, communications, renewable energy, electric vehicles, and defense systems. This is a direct opportunity to build a self-sufficient end-to-end ecosystem, reducing dependence on other established but potentially unstable sources. These minerals and the semiconductor production they provide are the cornerstone of modern technology. Africa's rich resources in these areas give it a strategic advantage.
In turn, African countries also have the potential for growth and progress by encouraging local value-added through export restrictions and prioritizing domestic R&D, which can retain domestic talent and provide employment opportunities for STEM (science, technology, engineering, and mathematics) graduates, who would otherwise face a tough market. Nigeria actually rejected Tesla's proposal to mine lithium in West African countries because the company was unwilling to establish a manufacturing plant there.
The supply of local raw materials greatly reduces the supply chain risks and costs for producers, including fuel, import and export fees, unforeseen geopolitical events or natural disasters, and supplier issues. Therefore, Africa should be seen as an indispensable part of the semiconductor supply chain.
However, Africa's value proposition goes far beyond resource extraction. Its young and technologically proficient population provides fertile ground for innovation and design. The potential for cooperation between research centers in Nairobi, Kenya, or Lagos, Nigeria, and established Western companies may further advance chip technology.Semiconductor Innovation and Manufacturing Hub
Africa's unique combination of raw material extraction to cutting-edge technology production offers a great opportunity for global cooperation and the development of a comprehensive semiconductor ecosystem.
Significant investments in education, infrastructure, and technology have positioned Africa as a hub for innovation and manufacturing. Efforts made by Rwanda and Ethiopia in building technology parks and innovation centers have inspired a new generation of engineers and technicians.
In recent years, Kenya has emerged as a center for innovation and technological development on the African continent, becoming the new leader in Africa's technology market. Innovations in mobile payments, investment in startups, improvements in technological infrastructure, and government support have all contributed to its rise.
As the cost of the semiconductor value chain in mature markets continues to rise, Africa's competitive pricing and untapped talent and innovation offer a promising solution. Known for its stunning landscapes and wildlife, the African continent may soon become the Silicon Valley of semiconductor design and testing, reducing dependence on critical materials from China.
The economic benefits of investing in Africa are clear, but its social and developmental impacts are equally profound. By tapping into Africa's potential, the United States and Western countries can help promote sustainable economic development, create job opportunities, and drive technological advancements that benefit the world.
The European Union's "European Chips Act" and the United States' "Chips and Science Act" provide opportunities for democratic countries to cooperate in strengthening the semiconductor industry, with a total project funding of $500 million.
African countries can leverage these initiatives to establish their own legislation, frameworks, and supplier networks to support value-added activities in processing, chip design, quality control, and backend functions, as well as flash memory or battery production. Implementing such policies will reduce the need to export critical materials to China.Establishing a Strong Partnership with Africa
The collaboration between Kenya and the United States marks a promising start to a potential alliance. It highlights the abundant opportunities that Africa offers to the semiconductor industry.
However, as the global demand for semiconductors continues to grow, Western countries must regard Africa as a valuable partner in establishing a robust, diverse, and resilient semiconductor ecosystem and supply chain.
To achieve this support, strategic engagement from African policymakers, the private sector, and the African diaspora is required to fully integrate the African continent into the global semiconductor supply chain and reduce supply chain risks.
Collaboration between regions, leveraging their respective strengths, will contribute to technological advancements. The time for Africa to shine in the semiconductor field and attract global attention has arrived.
*Disclaimer: This article is the original creation of the author. The content of the article represents their personal views. Our republication is solely for sharing and discussion and does not represent our endorsement or agreement. If there are any objections, please contact the backend.
Comment