New Delhi: The global semiconductor shortage is hitting the Indian mobile, consumer electronics and automotive sectors hardest during the festive season, with the automobile industry accumulating about 5 lakh pending orders, while sales are generally at their peak.
While customers usually get bargain deals or festive discounts during this period, this time they pay higher prices for many items ranging from mobile phones and TVs to cars due to chip shortages. Freebies have disappeared in most auto showrooms as manufacturers struggle to meet demand.
“If you look at the demand parameters reflected in the bookings or queries, they are very good. However, this year’s supply side has been slightly paralyzed due to this semiconductor problem.
Shashank Srivastava, Senior Managing Director (Marketing and Sales), Maruti Suzuki India, said:
He added, “According to current estimates, there are 4.5 lakh to 5 lakh bookings and Maruti Suzuki alone has booked between 2.15 lakh and 2.2 lakh units.”
The problem did not only get bigger in October but increased from August to September, Srivastava said, adding that “this time discounts and bonus offers will be severely disabled due to supply restrictions”.
This time is less than 15 days, as opposed to the regular inventory of about 40-day stocks by companies at the dealer level to increase retail demand during the festive season, especially around Navratri and Diwali, he said.
The stock was valued at about 1.75 lakh units on October 1, compared to a total sales of about 3.35 lakh units in the same month last year. As on September 1 this year, it was 2.25 lakh.
According to Rajesh Menon, Director General of the Automobile Manufacturers Association of India (SIAM), as a result of the severe shortage of semiconductors faced by Tier I and II component suppliers, vehicle manufacturers face supply restrictions on areas such as engine electronic control units, keyless entry, systems and inputs.
In terms of consumer electronics, CEAMA President Eric Braganza said the chip shortage was “the biggest challenge facing the consumer electronics industry because price increases are on the cards.”
Presenting the views of the Association of Consumer Electronics and Equipment Manufacturers (CEAMA), he said that for the time being, the sector has not seen an immediate impact on the supply sector due to shortages.
“However, as we enter 2022, the retail deficit will affect the supply side and lead to higher commodity prices. The domino effect,” Braganza said.
Expressing similar views, Prasir Singh, Senior Research Analyst, Counterpoint Research, said that in the first half of this year, the availability of products in India was relatively less affected by the global shortage of components.
“However, the crisis will affect the Indian manufacturing supply chain after the festive season … In terms of pricing, we have seen a slow rise in the prices of many product segments over the past few months.
“This trend will continue in the next few quarters,” Singh said, adding that price sensitivity due to component shortages will affect consumer demand in the Indian market.
Confirming the growth, Avneet Singh Marwa, CEO of Super Plastronics Pvt.
For 4K TV sets, there is a 50 percent price increase with a lead time of at least 60 days.
The company, which is licensed for brands such as Playbank, Thompson, Kodak, Westinghouse and White-Westinghouse to sell and manufacture LED TVs and other products, is facing industry problems going forward.
“TV production will be suspended in November and December. Production may be affected by 20-30 per cent in the coming quarter, which may continue till the end of 2022,” Marwa said.
Semiconductor is an indispensable part of modern electronic devices ranging from home appliances, laptops, smartphones and cars. During the COVID-19 epidemic its demand went through the roof as people were forced to work from home, thereby increasing the demand for electronic devices.
The demand for infected cars also increased as people prefer private mobility rather than shared or public transportation due to safety and health factors.
Som Kapoor, EY India Partner, Automotive, said, “The shortage of semiconductors continues to affect the production of electronics-enabled devices ranging from cars to computers to consumer goods.
From the point of view of an automobile industry, the use of semiconductors has both increased infotainment, sensor-based features, etc. and original equipment manufacturers (OEMs) are struggling to meet the increased demand when starting. New feature-rich models, he added.
However, the crisis presents a silver lining for the Indian manufacturing sector.
“Semiconductor manufacturers have a huge opportunity in India to invest not only in the captive automotive market but also in meeting the needs of other consumer goods and electronics industries,” said Siamin Menon.
In view of this, Kapoor of EY India said, “Despite the planned major capacity additions globally, considering the concentrated and complex supply chain, the problem will continue into the immediate future.”
“The cross-industry government-backed task force-based approach will help reduce anxiety in the short and long term perspective,” he added.
(This story was not edited by NDTV staff and was automatically created from Syndicate Feed.)