Electronic chip industry

Date: 03 - 07 - 2024


Source: Al-Wafd newspaper

Dr. Ali Mohamed Al-Khouri

The chip industry has become of great importance in the global economy, driven by increasing demand for consumer electronic devices, the expansion of artificial intelligence applications, and the increasing adoption of electric vehicles. The chip market is expected to reach more than $1 trillion by 2030, with a growth rate of 8%.

Egypt is moving to benefit from this sector to diversify the national economy and increase its competitiveness on the international scene, but it faces many complex challenges. In light of the fierce global competition, this industry requires huge investments and advanced infrastructure, which puts Egypt before a real test to gain a foothold in the production of advanced industries.

The cost of establishing a factory to produce electronic chips is one of the biggest obstacles to Egypt’s entry into this field. According to global estimates, the cost of building a modern factory may reach about 10 billion dollars, a number that far exceeds what the Egyptian economy can bear at the current stage. In addition, research and development in this field requires huge investments. For example, major companies such as Intel and Samsung spend more than 20% of their annual revenues on research and development, which reflects the importance of these investments to ensure survival. In the foreground.

Lack of local expertise is another challenge. The manufacture of electronic chips requires high skills and specialized expertise that are difficult to find in the local market. Egypt needs to attract international talent and develop a local base of trained engineers and scientists, but Egypt can benefit from the experiences of other countries and focus on building partnerships with international educational institutions to train and qualify their cadres.

Global competition in this field is merciless. Developed countries such as the United States, China and South Korea dominate the chip industry and enjoy enormous competitive advantages that include advanced infrastructure and strong government support. According to a McKinsey report, China alone has invested more than $150 billion in this sector over the past decade, which illustrates the scale of the challenge facing Egypt.

On the other hand, Egyptian infrastructure needs major improvements to be able to support the chip industry. This industry requires a stable supply of energy and water, and a strong communications network. According to a World Bank report, Egypt needs investments of more than $675 billion to improve its infrastructure over the next decade, which represents a major challenge, but also an opportunity to improve the economy in general.

Other factors such as political and economic stability play a decisive role in Egypt’s success in this field. Political stability encourages foreign and domestic investment, while high inflation rates and complex bureaucracy discourage progress. Therefore, Egypt needs effective economic policies to enhance stability and attract investments.

But despite all this, Egypt has some unique advantages that can help it succeed. The large domestic market, the strategic location linking Africa, the Middle East and Europe, and the abundance of natural resources such as white sand, are all factors that can contribute to the development of the electronic chip industry.

In general, to achieve real and tangible progress, decision makers must adopt integrated strategies that combine investment in infrastructure, developing local competencies, and improving the business environment. This should also be paralleled by a focus on creating an enabling environment for innovation and entrepreneurship, and providing incentives to companies that invest in research and development. The strong commitment from the government, civil society, and the private sector are all enabling factors that will contribute to overcoming the challenges ahead, achieving the desired goals, and opening new horizons for benefiting and excelling in this growing global sector.