Chip shortage

The shortage of semiconductor chips is affecting the automotive supply chain hard, restricting the speed of vehicle manufacture right from a three-wheeler to a big rig. The move to BSVI said to have lead to further escalation in the electronic content onboard every Indian automobile, the chip shortage is claimed to hamper production, a challenge that is likely to continue into next year when the next phase of BSVI emission norms are expected to come into force. An unprecedented surge in demand for electronics and personal computers amid the pandemic, claim sources, has resulted in a shortage of semiconductors. Most semiconductors used in Indian automobiles are imported. The Indian auto manufacturers are in fact known to import electronics and related systems worth nearly Rs.30,000 crore. The chips sourced from a few companies, most of them in US, find use in the various electronic control modules of automobiles. In a report by EY India, Vinay Raghunath, Partner and Automotive Sector Leader, has mentioned that semiconductors are an essential part of the DNA of newage gadgets spanning smartphones, laptops and cars. The post-covid demand growth across sectors has created a sudden splurge in demand for semiconductors which is another supply chain constraint that automotive manufacturers need to prioritize and address.” Said Yugesh Aglawe, Partner – Supply Chain, Business Consulting, EY India, said, “The current semiconductor shortage will certainly revive with time, however other similar disruptions may occur again.” “Automobile manufacturers, he suggested, should make use of rapid what-if scenario modeling capabilities that are available in modern-day intelligent digital planning solutions to assess such risks in advance.” “The ones who do this will mitigate their risks better and win more often in the market,” Aglawe added. Attributing the chip shortage, which is known to have caused some disruption at the Indian commercial vehicle manufacturers, to the substantial swings in demand due to the pandemic, the Semiconductor Industry Association (SIA) is known to have said that the sale of auto chips climbed sharply owing to the return of demand.