According to data from the Society of Indian Automobile Manufacturers (SIAM), car makers in the country sold 2,19,421 passenger vehicles in the domestic market in December 2021, a decline of 13 per cent over December 2020. The survey said that this is not a demand-side issue, but a supply-side issue. Data shared by various carmakers shows that there were over 7 lakh orders pending as of December 2021.
The survey also highlighted the efforts made by the government to promote semiconductor manufacturing in the country. Schemes worth Rs 76,000 crore have been approved for the development of semiconductors and display manufacturing ecosystem in the country. It may be noted that this effort comes at a time when domestic automakers are facing shortage of semiconductor supplies.
The survey said schemes like Production Linked Incentive (PLI) in the auto industry not only focus on boosting the production of semiconductors, but will also help Indian companies become globally competitive in chip manufacturing.
Due to the shortage of chips, many companies associated with various industries either closed factories or reduced production. Apart from the automobile industry, semiconductors are also used by companies associated with the medical and electronic equipment industry.
what are semiconductors
Semiconductors are electronic chips made from silicon. These help to control the current in the electronic circuits of cars. Cars today cannot be imagined without them. At present, all the cars available in the market use semiconductors. Cars cannot be made hi-tech without them.
Semiconductors are used in cars for display panels, navigation, lights, power steering and almost all automatic features. Due to the shortage of chips, there has been a huge shortage of semiconductors in the automobile industry, so cars are not being produced in the stipulated number.
Why Semiconductor Shortage Happened
Semiconductors are made from hundreds of different types of chips. Currently, the best quality chips are supplied by Qualcomm Inc. and Intel Corp. companies. During the global corona pandemic, there was a huge increase in demand for electronic components, due to which chip makers shifted their production capacity accordingly. But later when the auto industry resumed operations after the lockdown, the demand for microchips increased significantly, leading to a major disruption and chip makers unable to meet the demand.
The demand for semiconductors has increased in electronic devices like smartphones, TVs, etc., due to which the manufacturing companies are unable to supply. For this reason, there has been a huge jump in the prices of some semiconductor chips used in cars. There has been an increase in the cost of display driver chips in cars, which are also used in the production of televisions, laptops, cars and aircraft.