In the question below, a sentence is given which has a blank, meaning something has been omitted. From the options below, choose the correct combination of phrases that can fit in the blank to make the sentence grammatically and meaningfully correct. Because advanced semiconductor manufacturing increasingly requires enormous capital expenditure and technical specialization, several mid-sized producers ______ and instead entered collaborative production agreements. 1. phased out independent fabrication capacity 2. scaled back their standalone operations 3. putting off major investment commitments

The sentence discusses: → strategic reduction of independent manufacturing. Evaluate: 1. phased out independent fabrication capacity → Correct Shows gradual withdrawal. Sentence becomes complete. 2. scaled back their standalone operations → Correct Fits both grammar and meaning. Sentence: producers scaled back operations… 3. putting off major investment commitments → Incorrect This is a participial phrase. The sentence already has: several mid-sized producers ______ and instead entered… Parallel finite verb is required. Correct form would have been: → put off Thus only 1 and 2 fit. Hence, option (3).