For some time now, semiconductor shortages have troubled everyone from smartphone companies to automobiles. In such a situation, the month of July can be a little more disappointing for these companies.
Companies upset due to shortage of semiconductors
The Samsung India smartphone sales team has been verbally informing retailers that there could be a 70% reduction in handset supplies in July due to severe shortage of semiconductor chips and components. Several retailers told ET that the supply of brands like Apple, HP, Lenovo, Dell, Xiaomi, OnePlus and Realme has also been hit badly. Global chip and component shortages have intensified, affecting the supply of smartphones, laptops, smart TVs and internet-connected devices in India once again, as the industry faced the issue last year as well.
Three industry executives said that car makers are also feeling the impact and due to the shortfall they are not increasing production, leading to a loss of 10-15% in production which may continue for the next two quarters. This comes at a time when retailers and companies said they are reporting sharp improvement in sales across categories after states eased the lockdown last month.
Car companies are also worried
Several automakers, such as Ford, have either temporarily closed their India plants or adjusted production plans due to shortages. Hyundai has been using chipsets in larger vehicles for smaller cars, while Mahindra & Mahindra and Tata Motors have produced vehicles without chipsets and installed them in stockyards or dealerships over the past few quarters to ensure quick deliveries to consumers. has done.
Impact on India due to Taiwan and Vietnam
The shortage of chips and components has been exacerbated by the recent rise in COVID cases in Taiwan and Vietnam, which are major manufacturing markets and account for more than half of global production. Due to the drought in Taiwan, a lot of water is used in manufacturing. Smartphone maker Realme India and Europe CEO Madhav Seth said that the company can meet 80% of the demand. “We are working closely with industry suppliers and partners to resolve stock issues and meet stalled demand. We are confident that we have enough stock for the upcoming festive season.”
Problems are increasing due to supply shortfall
Ritesh Ghoshal, head of marketing at Tata-owned electronics retail chain Croma, said, “Smartphones, home appliances, laptops, TVs, supply is bad everywhere.” He says the shortage is causing the retailer to suffer significant sales losses, with laptop sales growing more than 50% and tablets by more than 100% compared to last year, despite the shortfall.
Retail chain Vijay Sales Director Nilesh Gupta said not all models are available and there are instances when laptop and tablet brands are completely out of stock. However, he says the silver lining is when one brand runs out of stock, another brand becomes available.
A spokesperson for Xiaomi said that due to the pandemic, there was a shortage in the supply chain for the past one year. With the easing of the lockdown, the company is optimistic that the supply chain will pick up, while it is also expanding local manufacturing capabilities. Neeraj Bahl, MD, BSH Household Appliances India, which sells the Bosch and Siemens range, said the global parent has informed that there will be a shortfall in the supply of connected dishwashers and built-in appliances.
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