SHORTAGE OF SEMICONDUCTORS
Semiconductors enable key functions such as high-end computing, operation control, data processing, storage, input and output management, sensing, wireless connectively and more. An inexpensive chip that costs hardly a few dollars has led to billions of dollars’ worth of losses for major companies across the globe. An analysis by Goldman Sachs suggested that at least 169 industries have been impacted by the global chip supply shortage. With no solution in sight till at least 2022, all countries around the world are staring at a massive hurdle.
WHAT’S BEHIND THE GLOBAL CHIP SHORTAGE?
The shortage first emerged after the Covid-19 pandemic devastated most countries in the world in 2020, leading to widespread restrictions. Although the impact was not felt due to lower demand for goods during the pandemic, the situation has changed drastically.
While demand for electronic goods across various segments catapulted, companies have been unable to deliver due to the chip shortage. Several reports indicate that the chip shortage may not end before 2022 as supply disruptions due to ongoing Covid restrictions may continue for at least a year. Experts feel that countries will have to ramp up investments considerably in chip building capacities to resolve the ongoing crisis.
DOES THE CHIP SHORTAGE IMPACT THE CONSUMERS?
Yes. The chip shortage directly impacts consumers as prices of everyday appliances and electronic goods from TV to smartphones have increased due to the global supply chain disruption. The hiked input cost may be a direct result of the global chip shortage. While major chip manufacturing companies have announced investments to ramp up producing lines, analysts feel it would take at least two to three years to build the new semiconductor chip production plants. “We are engaging directly with the semiconductor suppliers, spot buying from the open market and developing alternative sources. In parallel, we are looking at design interventions to optimize the semiconductor consumption or the footprint in the overall vehicle,” added Wagh.