Semiconductor chip shortage: what does it mean for the car industry??

There is still a shortage of semiconductors. Microchips are found in all electronic devices, including cars. We tell you what this shortage means for car manufacturers, what car buyers can expect and why the shortage has occurred in the first place!

The tiny chips are everywhere, whether in refrigerators, smartphones, or even in modern cars. If the semiconductors are missing, nothing works anymore. The lack of electronic components is making itself felt in pretty much every industry, and now it’s also affecting carmakers – in some cases, production is at a standstill.

  • semiconductor crisis has arrived in the auto industry
  • Some manufacturers have to announce short-time work
  • Delivery delays for new cars and production stoppages
  • Rising e-car demand could further prolong chip shortage
  • Coronavirus and storm in texas as main causes

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What is a semiconductor and why does a car need it??

at this moment, when you read this line, you are, so to speak, looking at a row of semiconductors. every electronic device uses these microchips, they are part of the circuitry. That’s why these chips are found in smartphones, game consoles, computers and even cars.

Microchips contain many tiny circuits that ensure that the device in which they are installed functions properly. Semiconductors are now needed a lot in cars, because the infotainment system, the digital displays, cameras and much more don’t work without the microchip.

How are microchips made?

Microchips are not manufactured like normal car parts – rather they require special factories where strict hygienic conditions are enforced. The environment must be ultra clean, which means no dust particles or static electricity.

However, the high standards also mean that microchips take a long time to produce, are very expensive and it is a challenge to meet the high demand under normal circumstances.

another problem is that chip manufacturers are concentrated in specific markets. Taiwan, in particular, is the main semiconductor manufacturing country, producing 50 percent of the world’s chips. This puts car manufacturers in a position of great dependence, which will have to be questioned in the future.

Why is there a shortage of microchips at the car manufacturers??

With so many products using microchips, even the smallest delays can have a catastrophic effect on the production of electronic products. In recent months, a number of problems have converged to cause major production bottlenecks for microchip manufacturers.

The following are some of the reasons for the semiconductor shortage:

The coronavirus

This pandemic has affected pretty much every aspect of life, and microchip production has been no exception. at the beginning of the pandemic, car sales dropped sharply, which also led to a drop in orders for microchips from manufacturers. Other industries, such as consumer electronics companies, bought even more chips as demand soared.

These included phone and laptop manufacturers, but probably most of all sony with its never-ending demand for the new playstation 5.

When automakers were ready to ramp up production again, they found themselves at the end of the microchip queue. microchip factories are taking up to six months to resume production of certain chip types, so automakers are now facing significant delays in their supply chain.

A winter storm in texas

As if the effects of the coronavirus weren’t enough, a storm in texas further hampered microchip production.

About 12 percent of the world’s microchips are made in the U.S., with a large share coming from texas. In february, however, texas was hit by one of the worst storms in the state’s history, causing widespread power outages.

the microchip factories were also affected, leading to the closure of some of them. it was so catastrophic that the manufacturer infineon, for example, expects it to take four months before production returns to normal – with all the chips to be produced in the next 12 months already reserved.

fire in japanese factory

In addition, the renesas plant in japan caught fire in march. This caused additional delays because 17 machines were damaged. Full microchip production at this plant is not expected to resume until july at the earliest.

Which manufacturers are affected by the semiconductor shortage?

the extent to which this microchip shortage has affected car production worldwide is quite astonishing. Here is an overview of the manufacturers and models affected by the semiconductor shortage:

manufacturer models delivery delays
mercedes e-class, GLC k. A.
Mini countryman plug-in, cooper SE around ca. 2 months
VW golf, golf GTE, ID.4 by approx. 2 months
jaguar all plug-in hybrid models ca. 1 year delivery time
land rover all plug-in hybrid models ca. 1 year delivery time
cupra all models by approx. 4 months
citroen all models several weeks
fiat all models around ca. 4 weeks
ford focus, kuga, S-max, galaxy,
fiesta
around ca. 3 months
kia all models mind. 6 months delivery time
seat all leon models, all tarraco-
models
by approx. 2 months
volvo XC90 plug-in hybrid ca. 6 months delivery time

Mercedes had to pause production of the GLC as a direct result, while mazda increased its production figure by 7 in the first quarter of 2021.000 cars reduced.

Mini had to close its oxford plant, which produces the mini 3 and 5-door, for a short time. Not far away, at jaguar land rover, production of the XE, XF and F-type as well as the discovery sport and range rover evoque had to be put on ice.

In 2021, the volkswagen group will also already have 100.000 fewer cars built than planned – also due to the temporary closure of the plant where the volkswagen touareg, the porsche cayenne and the audi Q7 and Q8 are built.

the most affected was probably stellantis, the owner of fiat, peugeot, citroen and opel, to name a few. Eight of the 44 factories worldwide have had to cut production, which means that 190.000 cars less were built than planned for the first quarter of 2021.

It is possible that the above models are available, but certain equipment cannot be ordered at the moment. Please contact your car dealer for more information.

When will there be enough semiconductors again??

It doesn’t look like the microchip shortage is going to end anytime soon, and almost certainly the shortage will continue beyond 2021. Infineon has indicated that up to 2.5 million cars will be delayed in the first half of this year, with other estimates of 5 million for all of 2021.

Ford itself expects that the production of 1 million of its cars will be affected by the shortage. However, not all manufacturers are affected in the same way – hyundai, for example, had already stocked up on chips before the shortage began, and was thus covered.

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Christina Cherry
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