The Indian Government has reached out to MediaTek to mediate discriminatory allegations by Indian companies. A report says the company has been diverting the majority of its supplies to Chinese vendors. As a result, companies like Micromax and Lava are reportedly facing shortages of chipsets.
Citing its sources, ET reports that the Indian Govt’s intervention to solve the issue is to avoid further complications. Pankaj Mohindroo, Chairman of ICEA(India Cellular and Electronics Association) says the govt is reaching out through proper channels to MediaTek. Apparently, it is doing this to negotiate the issue that has resulted in about 95% shortage of components for Indian companies.
However, MediaTek denies these allegations. It says the entire industry is experiencing shortages globally. It adds that the main reason is the supply chain disruption due to COVID-19 in addition to demand, 5G rollout. After the outbreak of the virus, companies faced a lot of issues and even started importing devices from China. Although reports predict a revival in 2021, the market is still yet to balance the demand and supply crisis.
Anyway, while the seriousness of the allegations isn’t clear, experts believe that it could also be due to Huawei stockpiling MediaTek’s chipsets in Q2. Back in May, after realizing the extension of the US ban, it reportedly increased orders to MediaTek by 300%. Later, as the September 15 deadline was approaching, it entered survival mode by stockpiling chipsets for the next 2 years.
Coming back, the report says that if Govt doesn’t intervene, it will affect Indian companies’ goals for the PLI scheme. Previously, the govt announced incentives worth ₹50,000 crores ($6.6 billion) including PLI, SPECS, EMC 2.0 schemes. Out of this PLI(Production Linked Incentive) requires companies to manufacture high-end phones for a period of 5 years locally and achieve yearly goals to get 4-6% incentive.
That said, experts say that Indian companies will be able to reach the first-year target of the PLI scheme only if they get supplies till March 2021. And if the issue persists, it isn’t going to be a smooth ride for them. Let’s wait and see how the situation pans out after the involvement of the govt.
