Although passenger car sales in India reached a record high of 3.9 million units in 2022–23, up 27% from the previous fiscal year, the nation’s largest automaker, Maruti Suzuki India (MSIL), warned on Monday that supply uncertainties for electronic components might have an impact on production in FY24. According to MSIL, the output in FY23 was somewhat impacted by the lack of electronic components.
Automobiles now contain a substantial amount of semiconductor chips. A chip might be a straightforward part with a transistor or an integrated circuit that manages a sophisticated system. Many semiconductor chips are found within popular sport utility vehicles, which explains why there is a long waiting list for these vehicles, especially the more expensive models. Taiwan’s dominance in this industry is a significant factor in the chip scarcity that began during the pandemic.
Around 80% of the world’s foundry market is made up of Taiwan and South Korea. Foundries are places where chips are made. China is currently attempting to build its own capacity. Major chip-making facilities in Taiwan, Japan, South Korea, and China had to suspend production at the start of the epidemic, which resulted in a buildup of demand that finally had a cascade impact. Suppliers in Germany, the US, Japan, and Taiwan provide semiconductors, components, and assemblies to Indian automakers. The majority of other automakers also keep a watchful approach.
Sales and manufacturing growth in FY23 coincided with a little improvement in the availability of chips and pent-up demand. But, businesses are now acting cautiously, and the chip shortfall could jeopardise production schedules for FY24.