Countries Competing to Develop Emerging Technologies

Technology dominance has been a sought-after area by nations. International politics and economics have been intertwined with technology as a binding factor. Looking back in history, technology was mostly driven by wars between the kingdoms. The kingdoms with cutting-edge technologies, be it advanced weapons, fortresses, shields etc., have won the war. New age technologies started getting developed and implemented around world war – II, where the semi-conductor chips were deployed to perform the impact calculations of a nuclear bomb.

Nations then realized the importance of semi-conductors and competed for dominating some or the other part of the semi-conductor manufacturing value chain. Post the world war-II, USA, Europe and Japan formed the main powers those tried to dominate semi-conductor technology and products related to that. Competition among nations brought in innovation. In 1965, Gordon Moore posited that roughly every two years, the number of transistors on microchips will double. This suggests that the development of semi-conductor chips gave birth to efficient electronics products. Development of semi-conductor manufacturing also brings in a lot of economic benefits to the society.

The society benefits from this development, as the cost of electronic products heads south and the features and quality (at reduced costs) of the products head north. Take example of the cost and features of mobile handsets. At the same time, the developments benefit the companies involved in the production value chain of the semi-conductors. Think Samsung, Apple, Microsoft etc., therefore, creating a win-win situation for societies and companies involved. Hence the countries that emerge as super-powers are those which have maximum involvement in the semi-conductor and related manufacturing space.

Similarly, given the climate focus, other technologies like batteries and electrolysers form the forefront of technological advancements. Development of Battery is primarily driven by Electric Vehicles. Going ahead, as the emission norms become stricter, battery driven electric vehicles will take the main stage instead of the IC engine vehicles. Heavy investment in R&D of battery technologies is expected to improve the battery performance & usage. It is also expected to drive related products to mass adoption. This will provide a similar economic benefit to the society in line with the semi-conductor industry. Electrolyser, used for Green Hydrogen production, is also expected to change the Hydrogen and in turn fuel landscape of the world. In general, once a new age technology grows its roots in a country, the country sees more related and advanced innovations in that sector. Manpower of the country also gets motivated and inclined towards development of the technology. According to Romer’s theory of Economic growth, where he argued that growth of a nation comes from the spill over from the “knowledge sector” in the nation. Industries get developed and solve for “scale”, “scope” and “learning”. This means reducing costs through scale, enhancing profitability by offering more products (scope) and learning from the customers to improve the product. This forms a positive feedback loop, which triggers the growth engine of an economy.

Ecosystem gets developed, Ancillary vendors, equipment manufacturers, robotics etc. for technology manufacturing gets built. All this drives localization of ancillaries and adjacent products. The area of domestic content (feed material and ancillary materials), if managed properly along with other financing and government support, can work wonders in leapfrogging a nation to a Tier-1 status, e.g., Japan. Apart from driving manufacturing costs down, it also helps in building an ecosystem in other areas of technology. A technology which was developed for manufacturing semi-conductor chips, found its way to manufacture solar wafers. Therefore, countries like Germany and USA, which were on the forefront of the poly-silicon technology in 1950s – 60s, remained leaders in the solar market until 2010, post which China jumped into the technology and dominated it.

There are uses of one technology cross-pollinating the ecosystem of a completely different technology. For e.g., many technological developments found their way into healthcare. Furthermore, with the technological advancements, development of future optionality in areas of strategic and commercial importance opens up, and a nation may align to become a global leader in certain areas to develop a unique competitive advantage. It should, therefore, not be surprising that nations strive to achieve dominance in the technology space. For the growth of an economy, apart from the domestic market, a country targets the export market to tap into the customers of the other countries. With this, it benefits from attaining large scale operations, which brings down the cost of production and allows the company to offer a better product. Exports also bring in foreign currency inflows to a country thus strengthening the currency of the country. Once the export competitiveness is achieved, GDP of a nation grows. In the light of the above, it is logical that nations strive to control new age technologies.

Batteries and Hydrogen Electrolysers are the new buzz in the market. Batteries for EVs are required to reduce carbon footprint in general. Batteries also form many critical use cases in electricity generation, e.g., grid stabilization, firming of renewable power, replacement of Diesel Generator set etc. Green Hydrogen also shares a similar narrative. Since Hydrogen is ubiquitous as fuel in the industry, Hydrogen Electrolysers become a rising industry. It is viewed as a major element in the decarbonization of economies. Hydrogen also finds its use case in fuel cells, which have recently gained a lot of traction. Countries view Hydrogen as the fuel of future. In fact, once matured, it would compete with Batteries in Electric Vehicles and electricity generation. Therefore, Batteries and Electrolysers, although different technologies, share the concepts of electro-chemistry and have overlapping use cases. As nations strive to become clean energy leaders with net-zero carbon emission targets, becoming a serious industry player in the clean-tech space is a must.

It is thus natural that rich nations focus on R&D efforts in a slew of developing areas of Semi-conductor, Battery & Electrolyser to win the race to clean-tech.

- Kunal Saxena, General Manager - Strategic Initiatives, Amp Energy India