A time of scarcity for chips

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By: Kamal Baruah

We didn’t get thrilled at booking our new SUV the other day I was surprised when the dealer revealed that there is a waiting period of over six months. The information is startlingly high for new buyers. The long booking periods have become the norm lately despite the economic slowdown is recovering. Although there are many varieties of cars available in the market today automobile industry failed to live up to customers’ needs because of shooting up waiting periods for new vehicles.

The late 70s had been the golden period for the Bajaj Scooters. People would recall the popularity of riding a Chetak on the roads far ahead of the Vijay scooters. They were prepared to wait for up to ten years to get a Chetak. People chose Bajaj rather than waiting long for Premier Padmini and Ambassador Cars. My father had booked one but to no avail and had to buy from others. Maruti 800 has completely changed the Indian automobile scenario. A lot has changed then as we walked into a showroom and instantaneously purchased a car then. The liberation of the economy is being its most important beacon.

The digital world communicates with digital tools such as the internet, digital/smart devices, and other technologies. Today, new cars come with an infotainment screen that provides a bunch of features that require microchips to function but there is a shortage of semiconductors as the demand for chips is exceeding supply and the production of automobile and consumer electronics got affected across the world. The waiting period on the Mahindra Thar is soaring so high. The world’s largest technology company Apple has been forced to cut its production order of the most anticipated flagship iPhone 13 due to the ongoing global scarcity of chips. Currently, every vehicle manufacturer is facing problems as they rely on imported auto parts. Today there is chip famine. After Toyota, another global automobile giant Volkswagen to is considering a production cut. Though chip companies are on a war footing to ramp up production there is no early solution is in sight now.

Technically, a semiconductor or chip is usually made of silicon, having properties between conductors and insulators that are used to power a wide range of devices – cars, laptops, smartphones, household appliances, and gaming consoles, etc. Making chips is a complex process that takes months, involving multi-million dollar machines with molten tin and lasers in a dust-free giant factory. Taiwan, the US, China, South Korea, Japan, and the Netherlands are leading countries of manufacturing chips. Qualcomm, Nvidia, and Apple depend on Taiwan Semiconductors Manufacturing Corporation (TSMC), the world’s largest chipmaker. There are many factors behind the shortage of semiconductors. The surge of sales for electronic devices created a huge demand during the pandemic as work from home continued. Huawei has been blacklisted by the US for the tense relationship between the two trade superpowers and in turn, chip companies are increasing device prices. Domestic and global automobile production takes a hit as it cuts output in production observing ‘no production day’ for shortage in supply of semiconductors.

As the saying goes, “In times of scarcity, lions will travel great distances in search of food.” While the chip shortage is challenging, it could bring opportunities for the Indian automobile industry. Of course, it requires huge investments but EV maker Tesla is developing its own chip ‘Dojo’ to train AI networks in the data center. Samsung is expanding its footprint in biopharmaceuticals, AI, semiconductors, and robotics. Apple is using its M1 chip in its new iPads and Macs. Google is developing its CPU in a Chromebook laptop.

In India’s answer to the chip crisis, New Delhi backs the local semiconductor industry to help push the Aatmanirbhar initiative of the government. Our Prime Minister recently met Qualcomm CEO for investment opportunities in India’s telecom (5G) and electronic sectors for developing semiconductors and its supply chain in India. Tata Motors has recently revealed its plans to address the chip shortage crisis by setting up local industry in the semiconductor segment that will not only help to mitigate the crisis but also help the government and the automakers to save precious foreign exchange.

While there is still quite a bit to worry about the availability of chips but we expect that sooner or later things will get better. Hope this massive disruption in the supply chain of semiconductors would improve by the end of the year and we could get some light through the sunroof while switching off the air-conditioning to get some fresh air in the abundant hills of the Cherrapunjee. The coolness would be unparalleled in upper Shillong, however, children loved standing in a panoramic view and stargazing at the starlit sky over the Dhola-Sadiya and it’s a boon for me too as a photography lover to put some telephoto lens capturing young hog deer at roaming free and shoot some rhinos basking in the sun at the Kaziranga during this winter.

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