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Chips & components scarcity, logistics disruptions: Automotive, electronics woes might proceed until June quarter

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CEOs of shopper electronics and auto makers anticipate the scarcity of semiconductor chips and parts, and logistics disruptions to proceed until the June quarter. Till then, provides might proceed to lag behind demand for automobiles, smartphones, laptops, televisions and fridges. They anticipate to speed up new mannequin launches subsequent yr as challenges progressively ease.

As manufacturing and distribution amenities open up steadily and provides resume, the chipset scarcity will ease by the June quarter, stated smartphone maker Realme’s worldwide enterprise president and CEO for India Madhav Sheth. “Our launch technique for 2022 is on monitor,” he stated.

A number of CEOs stated they’ve misplaced vital income from potential gross sales this yr attributable to these disruptions, which additionally delayed new mannequin launches. However they anticipate losses will likely be decrease subsequent yr as manufacturing rises.

Indian carmakers misplaced gross sales of about $5 billion or 20% of car output in 2021, as per business estimates. That is anticipated to shrink to 10% subsequent yr. Gaurav Vangaal, affiliate director on the international automotive forecasting agency IHS Markit, stated India misplaced nearly half one million gentle autos attributable to semiconductor shortages in 2021.

“We do see persistent challenges within the international semiconductor manufacturing capacities to allocate and meet LV (gentle automobile) manufacturing demand,” Vangaal stated.

All auto and electronics corporations have confronted components scarcity and logistics delays for over a yr now attributable to Covid-led manufacturing disruptions, container shortages, closures and port congestion.

Lengthy-term Contracts Signed

These have additionally lifted costs of parts by 40-100%, whereas logistics prices have gone up five-six instances from pre-Covid ranges. The scarcity grew to become worse attributable to increased demand for merchandise with adjustments in life-style similar to work and examine from residence, and folks shopping for costly merchandise or automobiles in the course of the pandemic.

Within the final six months, Renault India has misplaced about 25,000 to 30,000 items or 30% of its month-to-month output because of the chip scarcity.

“We may have simply averaged our gross sales at 12,000 items, however because of the scarcity, we had been struggling to cross 8,000 items a month during the last six months,” stated Renault India MD Venkatram Mamillapalle. “The scenario is easing out a bit, however the visibility on provide remains to be weak. We anticipate this problem to extend until mid-2022.”

Panasonic India CEO Manish Sharma stated there is a cargo delay of over a month for parts similar to printed circuit boards that ought to normalise by the second half of 2022.

Firms stated they’ve additionally began getting into into long-term contracts with element producers, together with the smaller suppliers, to safe capacities and likewise have interaction with new suppliers. That is bearing outcomes, they stated.

Skoda Auto Volkswagen managed to get precedence allocation for chips from headquarters attributable to new launches, but it surely’s not getting sufficient provides but to start out a 3rd manufacturing shift, which had been deliberate for November. Gurpratap Boparai, MD of Skoda Auto Volkswagen India, stated the group is taking a look at vital progress in 2022 and it will likely be including a 3rd shift shortly.

Whereas the group is prone to put up excessive double-digit progress on the again of latest fashions, it shunned giving any progress forecast because of the scarcity of components.

Laptop maker HP Inc.’s chief monetary officer Marie Myers stated in a latest investor name that element shortages, in addition to manufacturing, port and transit disruptions, will “proceed to constrain income because of the ongoing pandemic in lots of components of the world” and can persist at the very least by way of the primary half of 2022.


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