Auto Sector Check - Semiconductor Concerns - More Global Than Local?: Nirmal Bang
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Nirmal Bang Report
Based on our channel checks and interactions with industry experts, we have attempted to understand more closely the current supply chain bottlenecks that have restrained the recovery of the automotive sector and possible course of actions to address the same.
The semiconductor industry witnessed a decline of 12% in 2019 followed by a growth of 5% in 2020.
However, it is expected to clock a sharp growth of 25% in 2021E due to the cyclical nature of technology products (transition to 5G) and increase in demand (led by work from home, preference for personal mobility, electric vehicles, Internet of Things etc).
We see the ongoing chip shortage issue to persist in the near term, as allocations are prioritised towards higher profit/core customer base (electronics) by the chip makers.
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