Shortage of chips in the appliance industry and its impact on foreign direct investment: the Case of Nuevo Leon, Mexico

Abstract

Purpose: This paper identifies the importance of chips for the appliance industry, the main factors influencing its current shortage, and the impact on foreign direct investments in the state of Nuevo León, Mexico.

Design/methodology: It is qualitative research with exploratory, descriptive scope. For data collection, this study uses a review of specialized literature and the conduct of semi-structured interviews with experts in the industrial, governmental, and business sectors.

Findings: This study highlights the environmental, political, and social factors that triggered the global chip shortage and the consequences that have arisen in the last two years from the international to the local context. The conclusions indicate a reorganization in the supply networks of companies in the industry and changes in their strategic planning designs taking benefit of their competitive advantages to meet market demand.

Originality/value: This is one of the first investigations conducted to study the effects of chip shortages on the appliance industry and its impact on foreign direct investment in the state of Nuevo León, Mexico. It is important to note that this research considers a multi-stakeholder perspective: government, companies, and academia.

Practical implications: Global microchip supply has been affected due to different factors that have caused changes in supply chains worldwide. As a result, manufacturing industries have had to modify their production processes by adapting post-covid19 recovery plans to meet the growing demand.

Research limitations: This research only studies the shortage of chips in the appliance industry; thus, future lines of research emerge, such as the impact of chips shortage in other industries, the consequences of national public policies, and their impact on the different edges that make up foreign trade and future strategies for the optimal production of this component to prevent complications in adverse situations.