Car Assembling Delayed in Pakistan Due to Global Microchip Shortage

by index360

LAHORE: Modern-day cars come with an extensive array of high-tech features and gadgets that are controlled through a microprocessor.

From auto transmission to seat temperature, these small but expensive silicon chips operate at the heart of all functions of the car with digitized precision and performance. 

After the initial recession in the wake of COVID-19, economies worldwide began a recovery phase resuming industrial and trade operations. An interesting thing observed during that phase was the rapid increase in demand which was a good sign for the industry but quite unexpected. It effected a severe shortage of microprocessors rendering manufacturers unable to meet the massive, unforeseen demand.

It’s the same scenario for Pakistan’s automobile manufacturing sector as well. With the surge in demand and production of required microprocessors becoming a challenge, manufacturers are racing against time to catch up and restore their disrupted supply chains and operations.

Even renowned Original Equipment Manufacturers (OEMs) that have recently arrived in Pakistan and are in the process of establishing their operations have been severely impacted by the chip shortage. On the international scale, auto giants General Motors Company, Ford, Volkswagen, Toyota, Honda and many more will be losing sales worth $61 billion this year.

The extension in the lead-time (from an average of 12 weeks to 26 weeks) for fulfilling bulk orders for microprocessors has also caused delay and in some cases completely halted the manufacturing of electronic hardware. This has also caused a price hike in the electronic products market.

Aware of the importance of microprocessors, especially with the age of electric cars also in its outset, automobile industry leaders and governments around the world are making large-scale investments in the production and capacity addition of the global microprocessor manufacturing industry.

It is analyzed that the current recession is a momentary one and automobile and its related industries will soon be operational at full throttle.

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