Asia Feels the Pinch of Chip Shortage


Asian carmakers have been hit hard by a global chip shortage. Chinese electric car start-up NIO, for example, is shutting a factory for 5 days due to the global shortage of semiconductors, according to the company's announcement last week. The overall supply constraint of semiconductors affected the company's production volume in March, therefore the company expected to deliver approximately 19,500 vehicles in the first quarter of 2021, adjusted from the previously released outlook of 20,000 to 20,500 vehicles.


Meanwhile, chip shortage is threatening smartphone suppliers. Taiwanese company Foxconn, the Apple's supplier, said that the global chip shortage will reduce its shipments by 10%. According to Foxconn’s CEO Young Liu, the company wouldn’t be able to fulfill some of its orders due to those shortages, which he expected would continue until at least next year.


From declined car deliveries to a supply shortfall in costlier smartphones, businesses across Asia are facing the brunt of an unprecedented shortage and high demand in semiconductor microchips.


The shortage stems from a confluence of factors such as large demand for new energy technologies like electric vehicle batteries. Besides, carmakers, which shut plants during the Covid-19 pandemic last year, compete against the sprawling consumer electronics industry for chip supplies. Consumers also stocked up on laptops, game consoles and other electronic products during the pandemic, resulting in tighter inventory.


Market experts believe that chip shortages are more likely to linger throughout 2021. Plans for supply resiliency must be taken, from research and development to manufacturing. As a result, Asian chipmakers are making moves to ramp up their production capacity. In 2020, the revenue of the semiconductor industry in Asia was around USD 267.59 billion. It was forecasted by Statista that this would increase by 2021, in which the semiconductor industry in Asia was expected to reach a revenue of USD 290.85 billion.

Source: Pexels

Source: Pexels


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