Chip shortage hits personal computing device supply in India

Ayushi Kar Mumbai | Updated on May 08, 2021

Goldman Sachs estimates at least 169 industries faced disruptions as a result of the shortages

The impact of the global shortage of semiconductors has started impacting availability of personal computers and laptops in India by 5 to 10 per cent. However, there is negligible impact on the mobile phone market as vendors have stocked up products to cater to the large Indian market.

Faizal Kawooza, founder of market research and analytics firm techARC said, “Before March, semiconductor shortage was a topic of speculation with not many brands admitting that there is a shortage. But after March I am hearing major brands openly admit that semiconductor shortage is an issue that they are going to face in the future.”

According to Pankaj Mohindroo, Chairman of the India Cellular & Electronics Association (ICEA), the disruption in semiconductor supply chain has led to a 5 to 10 percent reduction in the supply of personal computers (PCs), while the mobile phone supply felt no effect between the January and March period of 2021.

The semiconductor shortage began towards the end of 2020 due to sudden increase in demand for devices as everyone started working from home due to the pandemic. This was complicated by the disruption in the supply chain after many countries imposed a lockdown to deal with the rising number of Covid-19 cases. Goldman Sachs estimates at least 169 industries faced disruptions as a result of the shortages.

Navkendar Singh, Research Director, Client Devices & IPDS, IDC India said that in India PCs are facing more supply disruptions in comparison to smartphones because the Indian market for smartphone manufacturers is too large to let it be impacted.

“Mobile manufacturers are trying to prioritise supply for India, because firstly; it is the only market that is growing in comparison to the Chinese and the European markets. Average selling price for India is much lower than Chinese, American or European markets making it easy for Indian units to convince mobile manufacturers to keep supplying,” Singh said.

When it comes to PCs, brands are likely to prioritise European, American or Australian markets over the Indian one. “India is an open market”, Singh explains “thus brands like Apple do not have tie ups with telcos here as they do in the case of Europe with their partnership with Vodafone. Partnerships like these increase obligation for the PC manufacturing to fulfill demand in these regions in comparison to India,” Singh said.

Experts believe that the semiconductor shortage is likely to continue for a few financial quarters. Rajeev Khushu, Chairman of India Electronics and Semiconductor Association said, many chip makers have taken adequate measures to make their semiconductor fabrication plants more efficient apart from increasing the throughput of production lines and increasing the assembly and test infrastructure. “Many silicon players have announced their plans to increase capacity. I believe that by mid of next year we will see things settling down from a demand and supply perspective,” Khushu said.

Published on May 08, 2021

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