Some top auto parts suppliers said the semiconductor shortage, which has severely curtailed automotive production, will begin to subside from January and stabilize by the same time next year. These chips prices have already started to stabilize. Their job is to help install airbags, control entertainment units and power backup cameras. It is expected that, by September 2022, their cost will return to the level of October-November 2020.
Vikram Mohan, Managing Director, Pricol, a Coimbatore-based Tier 1 part producer, said, “From January 2021, the problem only got worse. Right now, perhaps, we are at a peak in terms of production constraints and losses. We believe that The second and third quarters are going to be very tough for the industry.” “We expect the pressure to ease a little from January and further relaxation in August-September next year,” Mohan added.
Pricol supplies semiconductor-powered electronic units, such as telematics and instrument clusters, to two and four wheeler manufacturers. About 45 per cent of the company’s turnover depends on such components.
An electronic component manufacturer based in Delhi said, “We are working with semiconductor manufacturers. There is a much higher supply requirement now than a few weeks ago. Now that some prices have stabilized, these prices have moved north from January. was.”
With the rapid increase in demand and limited supply, the prices of chips have increased manifold. According to Tier-1 suppliers, the prices of semiconductors have increased by 200-1,500 per cent as compared to pre-Covid levels.
Chip shortage has forced Maruti Suzuki and its subsidiary Suzuki Motor Gujarat to cut production at all three of their plants in September, leading to a 60 per cent reduction in production.
Utility vehicle specialist Mahindra & Mahindra (M&M) will produce 20-25 per cent less than planned in September. Tata Motors also talked about moderation in production and offtake volumes in the coming months.
Vijay Nakra, CEO, Automotive Division, Mahindra & Mahindra said, “Due to COVID-19 and shortage of semiconductors, the automotive industry across the globe has been affected. Even though the industry is working tirelessly to address the issue, But we believe the impact will be long-lasting. At M&M, we are finding credible and innovative ways to address the challenge on a priority basis.”
To ease the chip supply issue, which has also affected manufacturers of two-wheeler, commercial vehicle and electric vehicles. In addition, OEMs are in direct dialogue with semiconductor manufacturers to improve supply. OEMs are also signing supply contracts for the chips, which will be delivered after 12 months.
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