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Chip Shortage Delaying Launches, Makers Taking Measures to Mitigate Risks, Says CEAMA: Report

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  • Several manufacturers, using chips as inputs, are now facing bottlenecks in their capacities and expect a delay in launches of new products, added CEAMA
  • Companies are exploring a combination of technical levers (like design optimisation and value innovation), commercial levers (like hedging, dual sources and localisation), and process levers (like advance and joint planning with suppliers) to mitigate the impact

As per a report by PTI, the domestic appliances and consumer electronics industry, facing shortages in components such as semiconductors and chips, expects the situation not only to last through 2022 but also to stretch into 2023, industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA) said. Several manufacturers, using chips as inputs, are now facing bottlenecks in their capacities and expect a delay in launches of new products, added CEAMA.

CEAMA President Kamal Nandi added that shortage of chips, coupled with rising ferrous products, has also offset the softening of prices happening in the sector after some of the commodities like resins and chemicals have shown price corrections. CEAMA President Kamal Nandi told PTI that 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, they have taken appropriate measures to mitigate the near-term risks,” CEAMA President Kamal Nandi told PTI.

Companies are exploring a combination of technical levers (like design optimisation and value innovation), commercial levers (like hedging, dual sources and localisation), and process levers (like advance and joint planning with suppliers) to mitigate the impact, he added. He also said that it is a a multifaceted issue with currently no sign of abating. With demand on the rise and supply likely to remain constrained, it expects this shortage to last through 2022 and into 2023. Chips manufacturers are also ramping up production fees, which could give an upward push to prices in the future. He also said that the semiconductor industry is putting more capacity in place.

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The report added that he also said that 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 per cent every month from January onwards, stifling demand. The rally in commodities continued in Q1 and Q2 of FY22,” he said.

Nandi added that as the raw material prices hardened, its cumulative impact was felt during the summer season of the calendar year 2021. He added that material shortages were reported in conjunction with the rise in raw material prices, particularly in the case of resins, steel, aluminium, copper, glass, paper, chemicals, etc. He added that starting Q2 FY22, some of the commodities like resins and chemicals have shown price corrections over Q1 FY22, but this decrease is getting offset due to the upward price trajectory in the steel and non-ferrous category.

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