This is not something new but it’s something that every tech industry in the world is currently facing and this is one of the most talked-about and hottest topics in the industry right now. However coming to India, we are hearing reports that the appliances and consumer electronics industry in the country are facing shortages in components such as semiconductors and chips, expect the situation not only to last through 2022 but also to stretch into 2023.
Several manufacturers of the country are currently using chips as inputs, however, they are all reporting bottlenecks in their capacities and they also expect a delay in the launches of new products.
“The industry might run short of controllers owing to shortages of semiconductors and other electronic components. Keeping in mind the surge in demand during festive, we have taken appropriate measures to mitigate the near-term risks.”
But according to reports, the domestic companies are exploring a combination of technical levers in design optimization and value innovation, commercial levers such as hedging, dual sources, and localization, and also process levers advance and joint planning with suppliers) to mitigate the impact.
Semiconductors and chips are the heart of India’s manufacturing sector and are used in components such as microcontrollers, optocouplers, power relay, switch, varistor, and connectors.
“It is a multifaceted issue with currently no sign of abating. With demand on the rise and supply likely to remain constrained, we expect this shortage to last through 2022 and into 2023. It is going to take two or three years before we start to see the positive impacts of these steps.”
Due to the shortage of materials, appliances are seeing a hike in their prices and are experiencing pressure on account of multiple macroeconomic factors like an increase in commodity prices, freight rates, and material shortages.
“The industry faced challenges in the last quarter of FY21, as commodity prices were at an all-time high, forcing the industry to raise prices by close to 3 percent every month from January onwards, stifling demand. The rally in commodities continued in Q1 and Q2 of FY22.”
The Indian appliances and consumer electronic industry was estimated to be around Rs 76,400 crore (USD 10.93 billion) in the pre-pandemic 2019.