With the impact of pandemic still lingering in the markets worldwide, a great spike in demand of vehicle sale in India can be seen in the automobile industry.
But with increased demand, an unbalance in the semiconductor market could be witnessed. This challenge in the supply chain can be mitigated with effective technology-based planning, according to an EY India report titled ‘Semiconductor supplies hitting vehicle sales: How Supply Chain challenges can be effectively managed through Digital Technology & Solutions for planning’.
Vinay Raghunath, Partner and Automotive Sector Leader, EY India, said, “Today, semiconductors are an essential part of the DNA of new-age gadgets spanning smartphones, laptops and cars. The post-covid demand growth across sectors has created a sudden splurge in demand for semiconductors which is another supply chain constraint that automotive manufacturers need to prioritize and address.”
Yugesh Aglawe, Partner – Supply Chain, Business Consulting, EY India, said, “The current semiconductor shortage will certainly revive with time, however other similar disruptions may occur again. Automobile manufacturers should make use of rapid what-if scenario modeling capabilities that are available in modern-day intelligent digital planning solutions to assess such risks in advance. The ones who do this will mitigate their risks better and win more often in the market.”
Automobile OEMs were faced with the threat of decreased consumer mobility due to work from home and lockdowns during the onset of the pandemic.
Vehicle manufacturers’ projections were initially correct – from April ’20 to June ’20, which witnessed nearly near-zero offtake in automobile sales.
Ironically, the pandemic also witnessed an increase in demand for high-end TVs, mobile phones, entertainment systems and laptops to serve the “forced to stay at home consumers”.
Semiconductor manufacturing is a complex global intertwined ecosystem, which has led to a supply chain that is vulnerable to macroeconomics, natural disasters and other factors.
Semiconductor companies operate in several different countries and jurisdictions with country-specific and international laws relating to health and environmental regulations. One such example is the lithography equipment, a vital step needed for front-end manufacturing, an area where one player commands more than 80% market share.