Arjun Aggarwal Provides Insights into the Chip Shortage in India
India has been a net importer of ICs for many years. As a supplier of RFID tags and labels, SIVA is also facing the challenges of the chip shortage. Arjun Aggarwal, Director at SIVA IoT gives further insights on the chip shortage.
How has the chip shortage affected companies in India?
Many industries are affected by the chip shortage in India. Banks for example require chips for credit cards. They have had to delay credit card applications, as only 30% the banking sector’s needs for chips are currently being met. In the automotive sector, the development of electric cars, which require more chips than regular gasoline powered cars have also delayed deliveries and increased waiting periods for new deliveries.
What about the increase in IC prices?
Although the chip shortage is critical, the more disconcerting problem is the inflation of chip prices. 10-15 years ago, the market price for a UHF chip was close to a dollar. In more recent times, the price has dropped to $0.02 or even $0.01 per chip. However, as a result of the shortage, there has been a massive explosion in costs. We’re now looking at a 20%+ increase in chip prices. Although many companies are focused on getting their chips from market leaders in IC production, chips provided by lesser known manufacturers can also identify the products that they are tagged to – that is the main function and intended use of the chip.
What challenges does SIVA IoT face in 2022?
In terms of placing orders on chips, SIVA IoT has been particularly proactive in 2020 and in 2021. However, the lead times of many chip companies ended up increasing, so that chip orders from 2021 still remain undelivered to this day. The problem here is that there is no end in sight in terms of when we will be receiving these chips.
The situation is more dire for NFC chips in particular. UHF chips are being produced in far larger quantities and the chips themselves are much smaller when compared to NFC chips. Since the UHF chips are that much smaller, wafer sizes have been increased from 8 to 12 inches in order to maximize the number of chips that can be produced per wafer.
None of this will stop SIVA IoT on its path to innovation. During the lockdowns in 2020 and 2021, we have developed a wide range of products for various industries, so we look optimistically towards the future.