Even as the lack of semiconductor availability hit the car sales in India, the challenge in the supply chain can be mitigated with effective technology-based planning, according to a latest EY India report. The semiconductor industry is finding it difficult to address the increasing demand of automobile industry as it also caters to other industries like IT, consumer electronics, mobile and medical equipment that witnessed unprecedented demand during Covid-19.
At present, the positive demand of automobiles has started to come back and the semiconductor industry is finding it hard to cater to the increasing demand. Automotive players will have to wisely bring back the ball of the pendulum on their side to get hold of the required demand of semiconductors for their continued survival and growth, the report said.
Vinay Raghunath, partner and automotive sector leader, EY India, said, “Today, semiconductors are an essential part of the DNA of new age 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 prioritise and address.”
Automobile OEMs were faced with the threat of decreased consumer mobility due to work from home and lockdowns during the onset of the pandemic. Vehicle manufacturers’ projections were initially correct as April ’20 to June ’20 witnessed nearly near zero offtake in automobile sales. Ironically, the pandemic also witnessed an increase in demand of high-end TVs, mobile phones, entertainment systems and laptops to serve the “forced to stay at home consumers”.
Yugesh Aglawe, partner and supply chain leader, EY India, said, “The current semiconductor shortage will certainly revive with time, however other similar disruptions may occur again. Automobile manufacturers should make use of rapid what-if scenario modelling 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.”
Semiconductor manufacturing is a complex global intertwined ecosystem, which has led to a supply chain that is vulnerable to macroeconomics, natural disasters and other factors. Semiconductor companies operate in several different countries and jurisdictions with country specific and international laws relating to health and environment regulations. One such example is the equipment for lithography, a vital step needed for front-end manufacturing, an area where one player commands more than 80% market share.
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