The global coronavirus pandemic has affected the Indian automotive industry in many ways, and one of them is the shortage of semiconductor chips that have been plaguing the auto sector for a long time. And now the country's largest passenger carmaker, Maruti Suzuki, has also come under its jaws. The brand has recently announced that production at its contract manufacturing company- Suzuki Motor Gujarat (SMG), will be partially affected this month due to a shortage in semiconductor supply.
The SMG will shut production on the three consecutive Saturdays in August (7th, 14th, and 21st August). Moreover, a temporary reduction from 2-shift to 1-shift working may also be observed at some production lines.
This facility has an annual production capacity of 7.5 lakh cars. Currently, it makes Maruti's highly popular models like Swift and Baleno.
Earlier, the production of many other companies, including Mahindra, MG Motor, Jaguar Land Rover, and Ford was also affected due to the same reasons.
Reason for semiconductor's shortage
The COVID-19 pandemic drove unpredictable interruptions in the global supply chain and the demand for semiconductors from non-automotive sectors like electronics and telecom companies experienced a huge surge in business thanks to the changing work environment and demand for the faster internet (4G & 5G connectivity). Also, when carmakers resumed their production after the nationwide lockdown and demand for new cars started shooting, they needed a lot of semiconductor chips to meet the high orders. However, the chipmakers dedicated their resources to other sectors that placed orders first. That's why now car manufacturers are facing this problem.
Also, it is important to note that the automobile industry is not the biggest sector for semiconductors and so, it is not on the highest priority list for chip manufacturers. As per a report of 2019 Global Semiconductor Demand, the auto industry has only a 12.20% market share, whereas the communication and computer sectors have a total of 61.5% serving.
