‘Resolution of semiconductor shortage may take months’

Bosch India, one of the largest auto component manufacturers, reported a 3.24 per cent decline in its consolidated net profit to ~184.25 crore for the December quarter, against ~190.24 crore in the year-ago period. A shortage in the supply of semiconductors impacted imports and automotive production in India. SOUMITRA BHATTACHARYA, managing director of Bosch India, tells Shally Seth

Mohile that the global shortage facing automakers is not ending anytime soon as the demand from user industries has far outstripped the supplies and it will take a while for new capacities being created to go on stream. Bhattacharya updates on the transformation exercise taken by the company, its preparedness for electric vehicles and the road ahead. Edited excerpts:

How grave is the shortage of the semi-conductors?

We had mentioned earlier that there was a challenge coming for the whole industry. This is not an India matter, it’s a global issue. The semiconductor industry has both the front-end and back-end and it requires a huge investment of anywhere between $1.5 billion and $4-5 billion in creating new capacity and takes close to a year or two. When you create capacity for the micro controllers, these also take up to six months. The world is dependent on defined semiconductor manufacturers and they supply to varied industries. The automotive industry’s share among the user industries of these chips is only 10 per cent. The largest off-take is from the electronics industry that includes computers, tablets, and mobile handsets, among others. So when the automotive industry recovered globally, it created a global shortage. Every OEM (original equipment manufacturer) all over the world is facing a shortage presently.

When do you see it getting resolved?

I would only say that while the situation is not as grave as it is in India, but it cannot be looked at in isolation. It’s not going to go away in weeks, it may take months. The situation is very volatile and things are changing on a weekly basis. In India, all semiconductor makers depend on imported items for the backend part. In this business, the front-end and the backend are not done at the same place, so it’s a very complex supply chain. It’s a complex challenge facing not only the automotive industry but also various other industries.

Bosch had embarked upon a transformation journey in view of the disruptions facing the auto industry. How have those efforts panned out?

We started our transformation far ahead of the Covid times with a very clear story line. The story line was — how do you move your business linked to the times required where you go digital, IOT (Internet of Things), where you focus on competency not at the managerial level but at the blue collar level? We did a proactive voluntary retirement scheme. We have been providing for expenses related to re-skilling, restructuring, and redeployment every quarter. For the last two and a half years, we have provided for a total of ~1,400 crore. We are now far more competitive and better prepared. In another two and a half to three years, Bosch will have 2,500 lesser associates.

Can you touch upon Bosch’s preparedness with regards to electric mobility solutions?

We are very strongly present in areas that India needs first — twowheelers and three-wheelers — and have participated with companies like Bajaj Auto and TVS Motor that have launched their electric twowheeler offerings. We are now at start-of-production stage for threewheelers. Bosch Netherlands has taken 26 per cent in SUN Mobility. We are its partners on the ground. Bosch, as a parent company, has decided to not get into cells, but we are very strong in battery packs, especially the ones required by twoand three-wheelers. In Bosch, we have made a 100 per cent owned company called Robert Bosch Manufacturing, which will have very agile, affordable, and innovative solutions on manufacturing, including electrification for our customers. We are carefully studying the market. We are using the strengths of our parents, looking at the regional needs and adopting a focused approach.