There is a reason for this: The global semiconductor supply crunch which has been exacerbated by the Ukraine crisis and lockdowns in China.
During the Budget debate in Parliament last month, Minister for Trade and Industry Gan Kim Yong had already warned that the war between Russia and Ukraine mayMr Rakesh Agarwal, partner, advisory, at professional services firm KPMG, had estimated that the semiconductor shortage would last for at least another one to two years due to the evolving Covid-19 variants.
DBS senior economist Irvin Seah said: “There are already supply side bottlenecks that have been ongoing for the last couple of years, and that has remained the main drivers of the spike up in prices.”At the onset of the pandemic during the second quarter of 2020, demand for electronics skyrocketed while the demand for automotive vehicles dwindled
US-China trade disputes over the last couple of years, he added, had also significantly impacted the global semiconductor supply chains. But taking into account the vehicle quota system in place here, Dr Theseira said: “The reduction in global supply is not consequential when you consider that you can’t sell more new cars than there is quota anyway”.