hometechnology NewsSemiconductor sourcing: Increased production, supply chain innovations improve lead times
Semiconductor sourcing: Increased production, supply chain innovations improve lead times
A recent study by Deloitte has the Indian semiconductor market valued at 55 billion dollars by 2026 with smartphones, wearables and automotive components accounting for over 60 percent of chip-demand. The timing couldn't be better for the semiconductor supply chain, thanks to diversified production and improvements in logistics. This, in turn, has led to shorter procurement timelines for raw material as well the the semiconductors themselves.
It's a good time to be a chip-maker. A universal demand for semiconductors coinciding with two years of a Chinese supply glut has pushed hardware and automobile companies to look for alternatives, only to finally see availability turn a corner.
A recent study by Deloitte has the Indian semiconductor market valued at 55 billion dollars by 2026 with smartphones, wearables and automotive components accounting for over 60 percent of chip-demand. The timing couldn't be better for the semiconductor supply chain, thanks to diversified production and improvements in logistics.
This, in turn, has led to shorter procurement timelines for raw material as well the the semiconductors themselves.
"Earlier, lead times were 90 days; now it is coming down to between 45 and 60 days," said Eswara Rao Nandam, Founding President at semiconductor-maker, Polymatech.
"Lead times have improved dramatically — by four to six weeks," said Kamal Bali, President & MD at Volvo India, "But they can definitely be better."
According to component analyst supplyframe, the global semiconductor supply chain could ease out between July and December 2023 even as demand from certain markets cools off. The good news for India is the emergence of local manufacturing ecosystems thanks to both, homegrown chipmakers and overseas companies, looking to enhance their China+1 strategy.
While diversified production must be credited for quicker procurement, innovations in logistics technology have also helped. Logistics major DHL, for instance, has invested 2 billion euros towards automating supply chain and sharpening route-planning strategies. While the company won't comment on just how far its lead times have reduced, it is seeing efficiencies in operations.
"DHL has invested a lot in new technologies — we're doing a lot of AI, machine learning, cloud enablement and all of that," said Dirk Olufs, Chief Information Officer, DHL Express, "On route-planning, for example, we are in a much better position to plan our resources accordingly."
Lead times could improve further — Prime Minister Modi has welcomed chip-makers with promises of a 50 percent subsidy. Then there are the likes of Foxconn and Micron looking to establish a manufacturing base in India, even as cost-competitiveness, better logistics and ready availability could well put the country on the semiconductor supply map.
First Published: Aug 8, 2023 6:03 PM IST
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