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The Economic Times

Chip-crunch saga part II: After a USD60 billion hit, here's how automakers can rewire supply chains

Chip-crunch saga part II: After a USD60 billion hit, here's how automakers can rewire supply chains

Automakers are digging in to overcome the global shortage of semiconductors, something that will leave a lasting impact on the industry. While legacy approaches to supply-chain management can be blamed for the current mess, the real solution lies in making systemic changes. Can auto companies fix what’s broken?

  • 19.03.2021
  • min read

The Economic Times

Chip-crunch saga part II: After a USD60 billion hit, here's how automakers can rewire supply chains

Consultancy firm Bain & Company reckons the mess isn’t just a result of temporary factors. There are systemic issues at play. It says that a lack of understanding about risk exposure, in combination with “legacy” automotive approaches to supply-chain management, brought the industry to this point. “Individual players, and the industry as a whole, need to define holistic chip strategies that make them more resilient against external shocks,” it believes.

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There is a school of thought that believes automakers should do an Apple by designing their own chips. Indeed, Tesla CEO Elon Musk had talked about moving to chips designed in-house, with Samsung manufacturing them in the US itself.

But it would pay to be cautious. As Peter Hanbury, partner at Bain & Company and the leader of its manufacturing excellence practice in America, points out, “The cultures and capabilities of the two industries are very different, which would make it very challenging for auto OEMs to design their own chips.”

The Economic Times