Auto and EMS Stocks Slide as Chip Shortage Fears Intensify Amid Geopolitical Tensions
Auto Ancillary and Vehicle Makers Lead Decline on Nifty Auto
Shares of automobile and electronics manufacturing services (EMS) companies declined sharply on Monday, March 9, as concerns grew that escalating geopolitical tensions involving Iran, Israel, and the United States could disrupt semiconductor supplies and affect production across key industries.The selling pressure was visible across the Nifty Auto index, where all constituents were trading in negative territory during early trade. Auto ancillary companies were among the worst affected, with Uno Minda and Samvardhana Motherson falling about 6% each.
Major automobile manufacturers also saw notable losses. Tata Motors Passenger Vehicles, Ashok Leyland, and Maruti Suzuki were trading lower by around 4% to 5%, reflecting concerns over potential supply chain disruptions.
Around 9:20 am, the Nifty Auto index was down 3.6%, with all 15 stocks in the index trading between 2.6% and 6% lower. The biggest laggards included Samvardhana Motherson, Tata Motors Passenger Vehicles, Ashok Leyland, Uno Minda, and Maruti Suzuki.
Chip Supply Risks Linked to Taiwan’s Natural Gas Dependence
Market concerns have intensified due to Taiwan’s critical role in the global semiconductor supply chain. The island’s chip manufacturing industry relies heavily on imported natural gas to power its energy intensive facilities.Approximately 37% of Taiwan’s natural gas imports come from Qatar, and supplies have been affected following the recent blockade of the Strait of Hormuz. Prolonged disruption in natural gas supply could affect semiconductor production, potentially resulting in chip shortages and higher component costs.
Such shortages could directly impact the automobile sector, where semiconductor availability is crucial for vehicle production.
EMS Stocks Also Under Pressure
Shares of EMS companies also witnessed significant declines. Syrma SGS dropped as much as 8%, while Dixon Technologies fell 3.5%, slipping below the ₹10,000 per share mark and touching a multi year low.Other EMS players including Amber Enterprises, Kaynes Technology, Dixon Technologies, and PG Electroplast were trading 3.5% to 8% lower during the session.
The sector has already been grappling with rising input costs, particularly for memory chips.
Rising DRAM Prices Add to Industry Challenges
According to reports cited by Morgan Stanley, data from TrendForce suggests that DRAM prices could rise between 88% and 93% in the first quarter of 2026, followed by another 20% to 25% increase in the second quarter.Morgan Stanley has maintained an underweight rating on Dixon Technologies, assigning a price target of ₹8,157, which remains the lowest target for the stock among brokerages.
The brokerage noted that a sharp rise in DRAM prices could add further pressure on an EMS industry that is already facing subdued demand trends and higher component costs.
The combined impact of potential semiconductor shortages and rising memory prices has raised concerns about production costs and supply chains across both the automobile and electronics manufacturing sectors.
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