Chips scarcity to ease by H2 2022

INDIA’S PROJECTED ANNUAL DEMAND FOR 28 NM CHIPS NODES AND HIGHER IS ABOUT $25 BILLION, 5% OF GLOBAL DEMAND

NEW DELHI: Consumer electronics makers expect the semiconductor shortage to ease by the second half of 2022, pinning their hopes on plans of global chipmakers to roll out more fabrication units abroad. Meanwhile, they have adopted strategies to counter the effects the supply constraint is having on manufacturing and retail sales. The semiconductor industry has been unable to keep pace as unexpected surge in demand for personal computing devices for remote work and supply-chain disruptions during the pandemic led to long wait times for companies that make mobile phones, computers and cars and appliances.

The shortage has increased lead times to as high as three months for consumer electronics such as laptops and smartphones makers, which is a relatively softer hit than auto sector, where the shortage has increased lead times to as much as nine months, said Satya Gupta, adviser at the India Electronics and Semiconductor Association. “The supply chain should ease in the second half of 2022, as fab capacity being set up by players like TSMC, Samsung and Intel kick in.” India’s projected annual demand for 28 nm semiconductors nodes and higher is about $25 billion, as per government estimates, and is 5% of global demand.

Industry executives and experts said brands have cut output by as much as 30%, while others have delayed launches or recalibrated order books. “Gradual easing of supply constraints should take place by June, and it should ease fully by year-end,” said A. Gururaj, managing director of Optiemus Electronics Ltd, which makes smartphones, laptops and wearables. He added that an increase in volumes of semiconductor supplies is expected by March. Smartphone maker Realme said the industry has had to change its strategy. “We are proactively collaborating with prominent chipset manufacturers,” said Madhav Sheth, CEO at Realme India. He said the company expected chipset shortages to ease by the second quarter of 2022.

Seth added that the chip scarcity has changed the launch plans of smartphone brands, including Realme. “Despite the best efforts to absorb pricing internally, the prices of a few items had to be increased for sustainability,” he added.