In addition, the shortage of chips, coupled with the rise in ferrous products, also offset the decline in prices occurring in the sector after some of the raw materials like resins and chemicals suffered price corrections, the company said. President of CEAMA, Kamal Nandi.
“The industry may run out of controllers due to shortages of semiconductors and other electronic components. Given the surge in demand over the holidays, we have taken appropriate steps to mitigate the risks in the short term,” CEAMA President Kamal Nandi told PTI.
Companies are exploring a combination of technical levers (such as design optimization and value innovation), business levers (such as coverage, dual source and localization) and process levers (such as pre-planning and joint with suppliers) to mitigate the impact, he added.
Semiconductors and chips are used to manufacture key components such as – microcontrollers, optocouplers, power relays, switches, varistors, and connectors – for a range of devices manufactured by industry.
“This is a multi-faceted problem that currently shows no signs of slowing down. With demand rising and supply likely to remain limited, we expect this shortage to last until 2022 and 2023. “Nandi said.
What’s more, chipmakers are also raising production costs, which could push prices up in the future, he added.
However, he also added that the semiconductor industry is building up more capacity, but it will take time.
“It’s going to take two or three years before you start to see the positive impacts of these measures,” said Nandi, who is also a business leader and executive vice president of Godrej Appliances.
The price of home appliances is already under pressure due to multiple macroeconomic factors such as rising commodity prices, freight rates and material shortages.
“The industry faced challenges in the last quarter of FY21 as commodity prices were at an all time high, forcing the industry to increase prices by nearly 3 percent each month from January, stifling demand. The rally in commodities continued in Q1 and Q2 of FY22, “he said.
Nandi added that as commodity prices hardened, its cumulative impact was felt during the summer season of calendar year 2021, copper, glass, paper, chemicals, etc. ”
Together, the inflation of commodity and logistics costs has had a severe impact on input costs.
“From the second quarter of FY22, some raw materials like resins and chemicals suffered price corrections compared to the first quarter of FY22, but this decrease is offset by the upward trajectory awards in the steel and non-ferrous category, ”added Nandi.
India’s home appliance and consumer electronics industry was estimated to be worth around 76,400 crore rupees ($ 10.93 billion) before the 2019 pandemic.