“The very worst (of the shortage) at some point in time will be behind us. But so far, we cannot say the warning is over,” said Stefan Hartung, Chairman of Robert Bosch Gmbh. The supply constraint was still severe, he said. Hartung was speaking on the side lines of the German manufacturing group completing 100 years of operations in India.
The comment comes at a time when the production of automakers in India and around the world has severely been curtailed, especially for high-end vehicles that require more chips per vehicle.
While Bosch produces some semiconductors itself in Europ, it buys from outside most of the chips used for the automotive industry, Hartung said. The global semiconductor supply chain was short of capacity and that was impacting not only the automotive industry but also household appliances and consumer electronics, he added.
Semiconductor manufacturers from Taiwan to Europe have invested in increasing their manufacturing capacities since early last year, but the added capacities will take at least till later this year to become operational.
Soumitra Bhattacharya, the president of the Bosch Group in India, told ET that the chip shortage will not worsen when compared to the present demand in the market. However, if the demand for new vehicles increases further, the shortage may worsen.
Because of the supply chain challenges, the domestic passenger vehicle industry will close the ongoing financial year with production of around 3.5 million units compared to the peak of 4 million in FY19, Bhattacharya said. However, the industry was likely to surpass that peak in FY23, he added.
Meanwhile, the heavy commercial vehicles segment will take at least till FY26 to reach its previous peak of 480,000 units production and close this fiscal only at around 270,000-300,000 units, Bhattacharya predicted. The two-wheeler market will also take up to three years to surpass its previous peak, he said.
As part of its 100 anniversary in India, the Bosch Group announced that it will be investing Rs 2,000 crore over the next five years with half the funds going towards developing new mobility technologies and the rest going into building capabilities in the digital space.
The investments will also include the investments made to participate in the government’s production-linked incentives (PLI) scheme, the company said.
