Relief for carmakers as chip shortage eases

Chandigarh, October 26

The chip shortage faced by Indian passenger vehicle makers is easing, with current availability at 85-90% of the total requirement. According to experts, improved supply and sluggish demand for computers and mobile phones has led to reallocation of semiconductor chips for other segments, particularly automobiles.

Production loss dips

The chip shortage faced by Indian PV makers is easing, with current availability at 85-90% of requirement. The production loss is estimated to have declined to under 2 lakh PVs by the end of September.

— Anuj Sethi, Senior director, Crisil Ratings

Broadly, the computer and communication equipment (C&C) segment consumes 63% of chips produced, followed by automobiles (13%), and consumer and industrial segments (12%). Passenger vehicles (PVs) consume around 1,500 chips on average, the highest among all automobile types.

The chip requirement increases as more advanced electronic features are incorporated. Electric PVs use almost twice as many chips as internal combustion engine (ICE) PVs.

It is worth noting that the shortage of semiconductors had hit automobile production and sales in India in fiscal year 2021 and 2022 and a large part of fiscal 2023.