The shortage of semiconductor chips has forced carmakers and bike makers in India to cut their production.
The world is witnessing a hangover effect of the first Covid wave when many semiconductor industries were shut due to worldwide lockdown.
Major chip-making industries are located in the US, Japan, South Korea, Taiwan and China. Due to lockdown, the facilities were forced to shut down.
The effect of shortage is long-term as it creates follow-up famines of semiconductor chips. As demand increase, the production cannot match up to it.
Impact of shortage
Car manufacturers are the largest consumers of semiconductor chips but are not receiving enough units to resume production.
The chip lead time has increased to 17 weeks post the recovery phase. The lead time is the time between when a chip is ordered and when it is delivered.
The percentage of electronic materials in a car has gone up to 40 percent. Bulk of the electronics is made up of semiconductor chips.
Response of Indian auto-makers
Indian companies such as Mahindra & Mahindra, Tata motors, Bajaj auto, and Ford automobiles have delayed launch of new products due to shortage of semiconductor chips.
Global automakers have adopted temporary measures to reduce consumption of semiconductor chips.
Many digital features such as rear-view display, navigation system, larger view screen etc have been cut-off from new models.
Semiconductor chips are electronic components that are used in manufacturing products such as computers, gaming hardware, smartphones, appliances etc.