Brussels (Brussels Morning) The global semiconductor shortage continues to stifle recovery for the automobile industry. The largest producers still struggle with meeting their targets because of the lack of microcontrollers and other chips necessary for manufacturing modern cars.
While most global carmakers reported good business results in the first half of the year, exceeding their revenue expectations in most cases, nearly all have missed their production targets, given the manufacturing bottleneck created by the shortage of microchips.
The semiconductor crisis that hit the automotive industry was partially self-inflicted, insofar as most carmakers expected lower demand and slower production during the peak of the coronavirus crisis. Their assumptions were based on the lockdowns that had forced factories to close and the fact that many potential consumers started working from home, reducing overall commuting needs.
As carmakers cancelled their semiconductor orders, chipmakers turned to producing more chips for consumer electronics, which experienced a massive surge in demand during the global lockdowns. Since semiconductor production lines require months to switch production modes for different chip types, the car industry was hit by a shortage of microcontrollers – the routinely ubiquitous and cheap components used in many modern car parts, ranging from braking assistance and airbag controllers to infotainment systems.
The shortage was exacerbated by a series of accidents in a number of semiconductor factories, called fabs, a fire in a facility in Japan, and a winter outage in Texas being prime examples
After the first two quarters of 2021, the German Volkswagen group warned that the impact of the semiconductor shortage was likely to be more pronounced in the third quarter, as it lowered its annual production forecast by around 450,000 vehicles – 5% of its total production levels last year.
Ferdinand Dudenhöffer, head of the German Centre for Automotive Research, told AFP that the crisis probably has reached its peak. However, he indicated that problems are likely to persist until 2023, before semiconductor production increases enough to meet rising demand. The current shortage, he suggested would result in 5.2 million fewer vehicles produced this year, with customers likely to experience longer delays and higher prices.
The EU and the US, meanwhile, have focused on boosting domestic semiconductor production as a strategic goal, in order to reduce their dependence on chips made in Asia, which accounts for the majority of semiconductor manufacturing today.