JOIN USAuto industry grappling with semiconductor shortage
Imagine you are waiting to buy your favourite car or gaming console. But you are disappointed as the dealer tells you that the wait for fresh stock just got longer.
In many cases, the blame needs to be pinned on the shortage of semiconductors. A worldwide shortage of semiconductor chips used in cars and consumer electronics has led to supply chain disruption.
The Covid-19 pandemic led to an increased demand for consumer electronics because many began to work from home and on the automotive side people preferred their own transport as opposed to using public transport due to fear of getting infected.
Now, what do semiconductors have to do with cars? A lot really. Cars these days are not simple mechanical machines. A massive amount of electronics go into cars now – whether it is the infotainment system, digital speedometer display, GPS systems, anti-lock braking system, stability program, traction system, fuel injection rate, transmission systems, speed and lane assist, automatic headlamp and wipers, airbags and many, many more, the need for electronics and semiconductors in a car has gone up manifold. And expensive cars will have a lot more electronics than cheaper ones.
Since the demand has gone up in the gadget and auto industries and huge inventories are not always maintained, it has led to this shortage.
Rajesh Goel, Sr Vice-President and Director, Marketing and Sales, Honda Cars India, said: “Currently, there are many disruptions that are impacting the industry, including the ongoing global shortage of semiconductors, logistics disruption and procurement issues. We are closely monitoring the situation and assessing the impact on our production volume in coming months. The situation is changing by the day and we cannot answer in detail. We are making our best efforts to minimise the impact on our production.”
A Tata Motors Spokesperson said: “Certain Covid-19-related challenges in the supply chain, including a global shortage of automotive embedded electronics continue to impact the auto industry. Tata Motors is taking appropriate measures through better planning and close coordination with all its affected suppliers to mitigate the impact on production of vehicles in turn affecting our customers.
“We anticipate that these global industry challenges are likely to continue in FY22 and believe that this is a wake-up call for the entire auto industry,” the company added.
Recently, Ford India were forced to halt production temporarily due to the semiconductor shortage. The company had said: “The global semiconductor shortage will impact vehicle production at Ford in the coming months. This issue is affecting the entire automotive sector and expected to continue for at least the first half of 2021.
Recently, Rakesh Sidana Director – Sales, MG Motor India, said: We are likely to see a disruption in the supply chain due to shortage of semiconductor chips globally. We may observe a few no production days in April 2021 as a preventive measure."
However, it is not all grim news. Toyota Kirloskar Motor (in Bidadi, near Bengaluru) has had no problems. "The shortage has not affected Toyota's production in India so far. We have managed very well because we get our supplies from our parent company in Japan. They follow a multi-location sourcing model," said Naveen Soni, Senior Vice-President, TKM.
Sudhir Goel, Chief Business Officer, Acer India, said: “The current semiconductor shortage initially came to light in the last quarter of 2020 owing largely to disruption in the supply chain and unprecedented demand for consumer electronics led by PCs. While it affected the auto industry initially, the shortage has had an impact on the consumer tech industries as well.
“These chips are used in computing devices and the current 'stay-at-home economy' of the pandemic is fuelling demand for computers, gaming consoles and other devices. The supply chain along with OEMs like Acer have been proactively working to address the situation and the global shortage for consumer products is starting to ease as better supplies are expected from second quarter of 2021 onwards and stabilising by next year."