A very simple logic: demand is high, why not work to provide more supply? That is business and economics 101. So, the postulation by John Mc Keown that Nigeria could go into microfabrication business to take advantage of the broad high prices of chips, while a good call at superficial level, will certainly struggle at a deeper level.
First, the condition precedent for Nigeria for a chip factory is not there. Yes, we cannot run a foundry with generators. Secondly, our universities are not there to produce the knowledge workforce to design chips and fabricate them. Thirdly, the comparative advantages are against Nigeria with silica, etc (be at least as good as TSMC to have opportunities in markets). You can add more challenges.
This is what Nigeria needs now in the semiconductor business: a clone of MOSIS. MOSIS is a service funded by the US military research unit which connects all universities and small chip design companies together, making it easier for people to create prototypes at largely zero cost. So, magically, a Stanford student can design a chip and send it to MOSIS and within 3 months will get five samples. Through MOSIS, the US government took out the burden of schools needing to build $1 billion factories, and got them to focus on designs.
And when your prototype is fine, you can then raise money to send the chips to TSMC, Global Foundries, etc. But that first phase is always on the bill of the government. Canada has an equivalent of that. China copied that model. Brazil did the same. My roadmap on that was the basis of my book which received a huge award.
Nigeria needs to nurture chip designers: once that is done, fabricating chips will make sense.
1. Advance your career with Tekedia Mini-MBA (Sept 13 – Dec 6, 2021): 140 global faculty, online, self-paced, $140 (or N50,000 naira). Click and register here.
2. Click to join Tekedia Capital Syndicate and own a piece of Africa’s finest startups with a minimum of $10,000 investment.3. Register and join me every Saturday at Business Growth Playbooks w/ Ndubuisi Ekekwe (Sept 4 – Oct 23, 2021), Zoom, 4.30pm WAT; costs N20,000 or $60.