The pandemic has taken a toll on every possible industry one can think of in the last year. There was a shortage of supply, hindrance in production, unavailable transportation, and several more obstacles in any business. One latest concern in the tech industry is regarding the shortage of chips that is creating a major disturbance in the semiconductor industry. The chip shortage has affected both the automotive and semiconductor industry on a global scale.
But, in response to the chip crisis situation, Foxconn mentioned last weekend that there will be “limited impact” on the company and its clients. Speaking of clients, Apple is one of the major clients of Foxconn, and since the clients are massive tech giants they always have a Plan B. With the advent of 2021, the pandemic though prevailing is easing, and Liu Young-way, chairman of the manufacturing conglomerate formally known as Hon Hai Precision Industry Co Ltd said that they expected the company to do better in the first half of 2021 (Gadgets 360).
Foxconn Global chip shortage
The global pandemic caused by COVID-19 created havoc across the globe. Though many small businesses were forced to shut down, the market for electronics boomed. During the lockdown, demand for laptops and gaming consoles increased unexpectedly as people were getting more inclined towards enjoying and working from the confinement of home. In the beginning, we didn’t have any choice but now people are adapting to this lifestyle. So, demand for good electronics, especially laptops, smartphones, and good connectivity are not going down anytime soon.
Due to this sudden escalation in demand for electronics, chip-making companies faced some difficulties in manufacturing and constant supply. So, the chip manufacturers have to reallocate their supply for the tech industry and away from the automotive sector. A sudden shift in supply from one sector to another was going to create a shortage in the automobile industry. But, it was not possible for the chip manufacturers to meet the demand in both sectors simultaneously amidst the pandemic.
Chip shortage in many sectors
The chip shortage caused many big automobile brands like Volkswagen AG, General Motors Co, and Ford Motors Co to cut their output capacity. Because without the chips, the final model won’t be ready for sale. The chip shortage affected the automotive industry with a huge jolt but eventually, the crisis had its impact on the smartphone sector. In the smartphone industry, the companies faced a shortage in application processors, display driver chips, power management chips, etc. But, the common people didn’t face the impact of this smartphone sector crisis in a great amount.
Amidst the crisis, chip manufacturers are likely to prioritize the biggest customers. Hence, it can be predicted that Apple is going to suffer the minimal impact of the chip crisis scenario. Foxconn’s biggest customer is Apple and it also has another advantage due to its large size hence a global presence. Though big companies have also faced crises during the beginning of the pandemic, they absorbed the shock much more efficiently than the smaller businesses.
Other interest of Foxconn
Though Apple is Foxconn’s biggest priority currently, the company is still looking out for growth opportunities in other sectors. Foxconn is showing its current interest in electric vehicles (EV) and Liu has further mentioned that their EV platform (MIH EV Open Platform) currently has around 736 partner companies participating from around the globe. The company is extensively working on this area and Liu believes that two or three models for presentation will be ready by the end of the fourth quarter. But, he has also mentioned that EV’s contribution to the company won’t be significant before the next couple of years.
For contributing significantly in the area of EV, last month Foxconn and Zhejiang Geely Holding Group came into a joint partnership which will provide contract manufacturing for automakers. This new venture is shared equally between the two companies who will also provide consultancy service for EV technologies. Apple is also planning to launch self-driving cars by 2024.
Every company is trying to evolve and keep up with the evolution in technology. But. among all these giant businesses, Tesla is the one that is way ahead of all its rivals.
Annasha Dey is an NIT student, who apart from studying engineering is also a content writer. She has a great interest in photography, writing, reading novels, and travelling as well. She is a foodie who loves socializing and hanging out with her friends. She is also a trained Kathak dancer and a big fashion enthusiast. Dey also loves watching TV series, which includes F.R.I.E.N.D.S. and Big Bang Theory. To be a better writer she prefers to read more