Chip bottleneck slows the automotive industry

Chip bottleneck slows the automotive industry

Persistent shortages of semiconductor products lead to production bottlenecks in car manufacturers and their suppliers. The paradox here is that increasing vehicle sales in China are exacerbating the situation.

Provided by Deutsche Welle

© picture-alliance/dpa/MAXPPP
Provided by Deutsche Welle

Despite all worries about the corona pandemic, optimism prevails on the stock markets. The are particularly popular with investors Semiconductor manufacturer stockswho benefit not only from the megatrend digitization, but also from the COVID-19 crisis. Because in times of lockdown and the associated home office the demand for IT products increases.

The Internet of Things with networked production, communication with the expansion of the 5G mobile communications standard and the infrastructure, for example with intelligent power grids, ensure that the demand for semiconductor products is constantly increasing.

Increasing demand from car manufacturers

The automotive industry also needs more and more chips for the complex warning and assistance systems, which are increasingly becoming standard equipment even in smaller vehicles.

And that’s where the other side of the coin shows. While the semiconductor industry is booming, the auto industry is suffering from chip shortages. Europe’s largest car manufacturer, the VW Group, will shut down production at Volkswagen’s main plant in Wolfsburg from this Thursday. Two production lines would be dormant for several days because of the supply difficulties, it said. As with similar measures, short-time work was applied for for the employees concerned in December, VW said. Alternatives and countermeasures would be examined. Short-time working is also threatened at the VW plant in Emden.

“We have a serious problem – but it’s not just the auto industry alone,” Bernd Osterloh, the powerful VW works council boss, announced in an interview in December. “The shortages in semiconductors affect many industries. In the turbulence of the Corona crisis, a few providers have miscalculated when it comes to supply. If we don’t have enough semiconductors, it affects the Electronic Stability Program ESP. We can do it Then don’t build a car. And there are no short-term delivery alternatives. “

Short-time work at VW and Daimler

Competitor Daimler also suffers from production difficulties due to the delivery problems of semiconductor manufacturers. According to a Daimler spokeswoman, short-time work is planned in the compact car plant in Rastatt from Friday. Among other things, models of the Mercedes A-Class are built there. Certain control units from the suppliers Bosch and Continental are affected. A report from Baden’s latest news According to Daimler, they decided to use the parts that were still available to equip vehicles with a higher profit margin than the A- and B-class cars.

PR photo: Infineon is Germany's largest semiconductor manufacturer and in the top ten worldwide

© Infineon AG
PR photo: Infineon is Germany’s largest semiconductor manufacturer and in the top ten worldwide

Looking more closely, it is the after-effects of the corona lockdown last spring and the resulting problems with the supply of electronic components that the automotive industry is still suffering from today. After sales slump at the car manufacturers at the beginning of the Corona crisis, there were sales declines at the suppliers. For this reason, leading semiconductor manufacturers switched their production at the time and supplied other customers – for example from the entertainment electronics sector – with chips.

Since the demand has risen surprisingly strongly since the last quarter of last year, especially in the world’s largest car market China, electronic components for the vehicle industry are now becoming scarce.

Long lead times for production changes

Although the semiconductor manufacturers had already expanded their capacities, the additional volumes would not be available for six to nine months due to lead times in the industry, the automotive supplier Continental had already announced at the beginning of December.

Industry leader Bosch also shared the same horn and announced that no provider could escape this market development.

Supply bottlenecks at the chip manufacturers had already led to the postponement of the presentation of the new iPhone at the tech giant Apple last fall. The Sony group suffered losses and was showered with malice by disappointed customers because its new Xbox game console was not available in sufficient numbers during the Christmas business for the same reasons.

Production of semiconductors in the clean room at the German Elmos AG

© Elmos AG
Production of semiconductors in the clean room at the German Elmos AG

Semiconductor market grows despite the crisis

The global market for electronic chips has been shaped by extreme fluctuations in demand for decades, writes the Frankfurter Allgemeine Zeitung. The current aggravated situation on the chip market is exacerbated by developments associated with digitization, electromobility and autonomous driving. This leads to a high demand for more sophisticated semiconductors. Regardless of economic cycles or crises like the pandemic, they formed an increasingly important basis.

According to the Central Association of the Electrical and Electronics Industry (ZVEI), the global semiconductor market grew by four percent to just under 430 billion dollars, despite Corona 2020.

Author: Klaus Ulrich


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