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Saturday, September 25, 2021

Global shortage of semiconductor chips hits revival chances of auto SMEs in Pimpri-Chinchwad

Automobile sales normally peak during the festive season but this year, the semiconductor chip shortage has resulted in a downturn for many companies.

Written by Partha Sarathi Biswas | Pune |
Updated: September 6, 2021 9:06:33 pm
The usage of semiconductor chips is more in passenger vehicles than commercial vehicles or two-wheelers. (Representational/Reuters)

The global shortage of semiconductor chips has started making its effect felt in the small and medium-sized enterprises (SME) sector in Pimpri-Chinchwad. As Original Equipment Manufacturers (OEM) slow down production, smaller players are feeling the pinch with their order books drying up.

Semiconductor chips are integral parts of the power train, chassis, safety systems, advanced driver assistance systems, and other parts of automobiles. They are used more in passenger vehicles compared to commercial vehicles or two-wheelers.

A renewed surge in Covid-19 cases in countries which supply these chips, especially those in Asia, has led to the current shortage. Due to longer lead time — the time between when the order is placed and the shipment is delivered — the automobile sector has been forced to cut down on its production.

Automobile sales normally peak in India during the festive season but this year, this shortage has seen many companies anticipating a downturn in production.

Sandeep Belsare, president of the Pimpri-Chinchwad Small and Medium Scale Industries Association, said the shortage has started affecting vendors of SMEs. “Our order books are drying up as the OEMs are reluctant to place new orders. The SMEs who are vendors and sub-vendors of the automobile industry are now working just 8 hours instead of the 12 hours they normally do,” he said.

Pimpri-Chinchwad has nearly 4,000-5,000 SMEs, majority of them in the automobile sector.

However, a lean order book is not the only problem facing the sector. Belsare said given the lack of overtime, labourers employed in the sector are also getting restive. “They are used to working for 12 hours and this lean period has affected their earnings. Some of the labourers are now thinking of migrating to places where industries have better work and pay,” he said. Any migration of workers, with the festival season round the corner, would be detrimental for the sector.

While the local industrial sector was slowly limping back to normal after the second wave of Covid-19, the recovery has been hampered by the high price of raw material and a lean order book.

However, SME managements are hopeful that the semi-conductor shortage would ease out later in the year and production will go back to normal levels.

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