Chip Shortage – This summer may just heat up automotive industry after a cold year

semiconductor shortage

Realme’s international business president and CEO for India, Madhav Sheth hinted at the end of semi-conductor chip and parts shortage by June quarter, giving hope that the upcoming summer may end the ongoing cold time for the automotive manufacturing industry too. Leaders of many auto and consumer electronic companies expect the struggles around the shortage of components and logistics to end by Q2 2022 but until then, the supply will continue to fall short of demand for products using these chips and parts, especially in the automotive industry.

The automotive industry resonates a hefty loss of potential earnings due to the ongoing disruptions and has also postponed many new launches. As per the estimates, the Indian carmakers lost around USD 5 billion revenue and almost half a million light vehicles this year due to aforesaid disruptions. Furthermore, the industry has been crippled on account of container shortage, COVID-led manufacturing interruptions, closures and port congestion – all of them leading to an increase in prices of raw materials and total logistics costs.

Panasonic India CEO Manish Sharma said there’s a shipment delay of over a month for components such as printed circuit boards that should normalize by the second half of next year. On the other hand, in the last six months, Renault India has lost about 25,000 to 30,000 units or 30% of its monthly output due to the chip shortage.

We could have easily averaged our sales at 12,000 units, but due to the shortage, we were struggling to cross 8,000 units a month over the last six months. The situation is easing out a bit, but the visibility on supply is still weak. We expect this challenge to prolong till mid-2022.”

~ Venkatram Mamillapalle, MD, Renault India

While the industry players have envisioned double-digit growth with the upcoming models, they’ve also refrained from giving any growth forecast due to supply chain disruptions.

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