MATERIAL SHORTAGE

Material shortage may trouble the auto industry as it responds to a good rebound in demand.

- Bhushan Mhapralkar

FM The chip shortage started in January 2021. It was in the making for the sometime as industries found their way out a challenging and Covid ravaged 2020. Realising that a good demand rebound was on its way, industries began to rejuvenate their supply network and alas, they were staring at a material shortage; at a chip storage to begin with as their use in almost every gadget or automobile has become a natural occurrence. Starting to emerge in later 2020, chip shortage found attention after the big automakers the world over began facing material shortage of critical electronic parts and modules involving them. The shortage got more news as automakers began pressuring Asia’s key chip making economies, South Korea and Taiwan, to prioritize automotive chips, even if it meant they supplied them less to other, smartphone and computer manufacturing customers. Political pressure to prioritise automakers’ needs may have eased things apart from the experience and knowledge of automakers and suppliers to mitigate supply chain challenges, it is an indication that material shortage may be here to stay. Mark Liu, Chairman, TSMC, is known to express that it is different from in the past, when allocation of chip production capacity was based on a first come, first served principle.