Skoda Cuts Its Production Amid Chip Shortage

The world is going through a severe chip shortage. Last week it was Apple that had reportedly cut short its production of iPhone 13 by a massive number. Now the automobile company, Skoda has stepped up and announced that they will be cutting short the production of their cars by 250,000 units. This shortage came as a surprise to many companies who will now have to hold back on their production. 

The market forces have cited many reasons behind this shortage but the primary one is a sudden surge in the demand. As the pandemic is subsiding across the globe, people have started going out. This has created a huge upsurge in the total demand for electronic as well as automotive products. Many companies didn't estimate this and thus didn't buy that many chips from the market. 

The other major reason is that since China is the largest chip manufacturer in the world, the majority of MNCs buy their chips from China. Since the pandemic forced everything to completely shut down, chips weren't manufactured in the capacity they used to be. Hence there is a shortage of supply and a rise in the demand for chips. Estimates show that this chip shortage will continue till the second half of 2022. The factories will again go back to their full capacity around the time. Till then, companies will have to manage their production with the chips they already have.