Auto Industry’s Bid to Beat Chip Shortage

shortageCar makers and component firms are working on multiple strategies including optimising the supply chain to overcome the shortage in semi-conductors that looks set to to continue in the coming months.

Mahindra & Mahindra (M&M) has prepared both short- term and medium-term strategies.

Large component manufacturer Bosch is taking steps to keep supply chains running and trying to find technological solutions.

“The semi-conductor shortage will not resolve in the coming three-to-six months and the shortage cycle will continue over six-to-nine months,” said Rajesh Jejurikar, executive director, auto and farm sector, M&M.

In the short-term, M&M is scouting for alternative suppliers to its Malaysian supplier of integrated circuits (IC) that are a component of electronic control units (ECUs).

The shutdown of the Malaysia plant had caused an acute shortage leading to production losses 20,000 units to the Mahindras.

“New IC source is being identified to create fungibility,” said Jejurikar. “Besides reserve stocks of critical ICs are being developed.”

“In the medium-term, the company is looking into its product development to find suitable substitutes to complex multi-functional ICs,” said Veejay Nakra, CEO, auto division, Mahindra.

He said the basic design of ECU in BS-VI changed as a lot of functions got integrated from multiple ECUs to a single ECU of a particular grade.

“As we realise that this could create a limitation going forward, we have taken steps to simplify and unbundle some of those complex functions of ECUs and that makes it easier to source them. We are also trying to source ICs from the open market.”

Asked if this will take a longer production time and have an effect on quality, Anish Shah, managing director, Mahindra said: “The time will be taken for proper testing and validation of the components. Once that is done the production will continue as scheduled and all this is being done to ensure quality and performance of our products. We will be reshaping the supply chain to counter any such crisis that may happen.”

Bosch India will continue to expand its chip manufacturing capacity and manage supplies with its partners.

“We expect the shortage to continue this year,” said Sandeep N, executive director and head of sales, mobility solutions, Bosch Limited.

“We are trying to find alternative chip for our auto customers to ease up the situation and take steps to run supply chains in a normal way. We are in very close contact with the automobile makers and are trying to find technological solutions,” said Sandeep.

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