The shortage of semiconductors across the world is due to pent-up demand, Sanjay Gupta, Vice President and India Country Manager, NXP Semiconductors, one of the largest automotive chip suppliers in the world, has said.
In an interaction with Moneycontrol, Gupta said it was a global phenomenon and that having semiconductor fabs in India would be a great asset to the country, referring to facilities where these chips can be made.
"Once the coronavirus outbreak situation saw some improvement from September onwards, customers started stepping out of their homes and buying cars and other electronic items. There was a sudden surge due to this pent-up demand post the lockdown and is not just restricted to cars but also electronics like laptops as well," added Gupta.
Moneycontrol has reported how the semiconductor shortage that has hit automakers in several countries has disrupted the production plans of automakers in India as well.
Ford India was forced to extend the four-day shutdown of its Chennai plant by another week to January 25. The company blamed the extended shutdown on the shortage of semiconductors.
The Netherlands-based NXP Semiconductors is among the largest players in this segment and posted a revenue of $8.88 billion in 2019. NXP is also one of the largest automotive suppliers in India and has 2,000 plus engineers working in the country.
The company works with brands like Bosch, Ericsson, Huawei, Hyundai, Nokia, Panasonic and Samsung among others.
Gupta said the situation could normalise over the next three-six months. Semiconductors are the chips that control critical commands in any electronic equipment.
Focus on semiconductor fabs in India
Gupta said the Indian government as well as the ministry of electronics and information technology (MEITY) had shown a higher interest in setting up fabs in India.
Semiconductor fab is a unit where chipsets or tiny circuits are produced for use in electronic devices. Here the silicon component called wafer is the base of the chip-set that is produced.
"Yes, there are still infrastructure bottlenecks that need to be resolved in India but MEITY is very serious about this plan," he added.
When asked about whether NXP will also be looking to set up such facilities in India, Gupta said the company would take a decision once the final guidelines were released by the government.
"NXP has a very structured approach to go for partners for fabs. Once the demand-side equation and proposal to invite global companies gets clarified in the long term, we will look into it," he added.
The ministry is working with the appliance and electronic goods makers to look at segment-wise information about which component is made where and what will be the requirement to set up production facilities in India.
Moneycontrol has reported that as part of the Atmanirbhar Bharat, or self-reliant India, mission, semiconductor wafer fabrication manufacturing on a large scale for use in white goods could be the first category.
Industry estimates suggest that the semiconductor market in India is worth $300 million. If semiconductor fabs are added to this, the value could go up to $ 4-5 billion.