Adverse impact on production of auto companies due to chip shortage

New Delhi: The waiting list for popular brand cars is likely to be lengthened as the shortage of chip / semiconductors in the country adversely affects the production of auto companies. According to auto industry sources, the shortage of chips has disrupted the production math. Due to these adverse coincidences, spot buying has been adopted by some companies. However, even this option is not entirely successful. The chip does not seem to be easily available in the market at present.

According to a leading car manufacturer, spot buying has brought some relief this month. However, the company's stock is down 10 per cent. So other companies are likely to reduce their production by 20 to 30 per cent due to shortage of chips.

According to chip makers, chip makers are working overtime to address the shortage of chips around the world. It is also making new investments to increase its capacity. But as it takes time to start a new plant, there is no immediate prospect of overcoming this adversity.

The production of semiconductors is a system that is associated with many countries which has disrupted its supply chain. Thus, this adversity will be seen for as long as two years, he said.

According to the largest Taiwan-based chip maker, it is in contact with other companies around the world to alleviate this adversity. It will take time to set up a new plant to increase the capacity, which is likely to remain the same till 202.

This unfavorable situation has been created by the increasing demand for chips by companies like computers, mobile home appliances. In which the auto industry has been hit harder. Because these companies operate on a just-in-time procurement system. In addition, rising prices of raw materials used in chip production have added to the adversity in the sector.