Semiconductor shortage will ruin auto and consumer electronics companies

Mobile phones will become more expensive next year, as will the prices of HDTV and 4K TVs by 50 per cent.

New Delhi: The global shortage of semiconductors could ruin India's mobile, consumer electronics and automotive companies. The period from Navratri to Christmas is usually marked by huge sales. The automobile sector is believed to be sitting on a pending order of Rs 5 lakh. Consumers tend to invest heavily during festivals during this period to take advantage of discounts. This time around, they have to pay higher prices for everything from mobile handsets to TVs and cars due to the lack of chips.

Gifts with products have disappeared as manufacturers struggle to meet demand. Now if you look at the demand criteria front then it is much better to have inquiries ranging from bookings. But on the supply front, this year is likely to be unlucky, due to the apparent shortage of semiconductors.

Shashank Srivastava, senior executive director, Maruti Shujuki India, said the stock was not coming up against bookings due to a shortage of semiconductors. In the auto industry, there are currently 2.5 to 5 lakh bookings pending and Maruti alone has 2.15 lakh to 3.5 lakh bookings.

The problem did not arise suddenly in October, but it started in August and spread to September. Discounts and overwhelming offers are unlikely this time around due to supply crunch.

Companies usually have a 30-day inventory to meet demand during Navratri and Diwali festivals, but this time the inventory is less than a fortnight.

The inventory stock stood at 1.75 lakh units as on October 1, as against 3.35 lakh units in the same period last year. As on September 1, the figure was 2.25 lakh.

Looking at the consumer electronics front, the CEMA (Consumer Electronics and Appliances Manufacturers Association) believes that the industry is not currently facing a shortage. But with 203 entering, supply is likely to be affected. Prices may rise at this time. We have seen this in the global markets, now it will have an impact in the local markets as well. This trend may continue for the next few quarters.

Supporting the move, Avneet Singhmarwah, CEO, Super Plastronics Pvt Ltd, said prices of high-definition and full-high-definition chips have gone up by 3 per cent in the last quarter due to shortage of chips. The next quarter could see a 30 per cent increase and the price of 3K TV sets could rise by up to 50 per cent.