Smartphones and automobiles supply in the country is going to get better as the supply chain constraints of the semiconductors are expected to ease out according to the chip designers from the second quarter of 2022. The availability of the semiconductors for smartphones is being speculated to start balancing out over the next couple of months whereas semiconductors for automobiles will see an improvement in supplies by the end of this year.
Semiconductor Demand in India
According to a report from ET, the VP and President of Qualcomm India and SAARC, Rajen Vagadia said in a statement that the importance of remaining connected in a hybrid with the same efficiency as in office was realised because of the pandemic. He said that increased demand for cameras, audio devices, phones, laptops were going to pivot the supply chain.
The rating agency ICRA in a report said that the availability of semiconductors for both consumer electronics and automobiles is bound to improve as the chip makers are working continuously on tailoring production to demand, optimising capacity utilisation and investing in expanding operations. However, the automobile manufacturers could lose about 500,000 units in sales because of chip shortage in the FY22, as per ICRA. This is equivalent to about Rs 1,800 – Rs 2,000 loss in sales opportunity.
Although the upcoming 5G spectrum auctions and the rollout of services in FY23 comes at the same time when semiconductor supply restrictions will ease will bring relief to the automobile manufacturers. Vagadia informed that the introduction of 4G made audio streaming possible and automakers started including more features in their cars and hence, increasing the number of chips used in the automobile. The introduction of 5G will ensure further enhancement in the overall vehicle experience which will also require a larger number of chips.
The arrival of the Internet of Things (IoT) and 5G technology in India is expectedly going to take the demand for semiconductors in India to up to $100 billion by the year 2025 as per the industry estimation. Vagadia also added that the Rs 76,000 crore PLI scheme introduced by the government for manufacturing semiconductors and display boards is a step in the right direction which will make India a part of the global value chain.