Chip crisis will persist, experts agree
The German industry association ZVEI, the mouthpiece of the semiconductor industry in Germany and beyond, recently commented on the supply situation. Its members include major chip companies such as Infineon, NXP and Bosch. Chip factories around the world have been working to capacity for months. Those who order today wait an average of five and a half months for their chips, explained ZVEI President Gunter Kegel according to a report in the business newspaper Handelsblatt. As a result, car factories all over Europe are repeatedly at a standstill, and many other industries on the continent are also suffering from the shortage. This dependence on Asia will only change if customers commit to buying in Europe, Kegel stressed. Only then would the billion-dollar investments pay off for chip manufacturers in the region.
Today, an average car contains semiconductors worth 750 dollars, in four years it will be more than 1000 dollars. The EU Commission has therefore set itself the goal of increasing Europe’s share of chip production from less than ten to 20 per cent.
Chip crisis will last until 2022, say stakeholders
The Ifo Institute, Germany’s largest economic think-tank, comes to a similar assessment in a recent evaluation. According to this, 93 % of the companies in the car industry are currently suffering from material bottlenecks.
One example is Volkswagen: according to reports by industry observers, the company will probably have to revise its sales forecasts for 2022 and 2023. Even if the general conditions are reasonably positive, VW will probably sell fewer cars next year than in the year that is now coming to an end. For this year, the company expects sales of just under 9 million units. For the next two years, the company has set itself the goal of increasing unit sales by about one million vehicles per year, but these figures will be hard to maintain in view of the delivery problems, according to various media reports. The volume brands Volkswagen and Skoda are said to be particularly affected, because within the VW Group the premium brands Audi and Porsche are given priority in chip deliveries.
It is becoming apparent that the low point has not yet been reached. “We have a lean period ahead of us,” VW works council leader Daniela Cavallo is quoted as saying. “There will be shortages for the whole of next year. Things will not suddenly get better in 2023 either. We still have the worst ahead of us.”
The semiconductor industry takes a similar view. Intel chief Pat Gelsinger did not express too much optimism during a visit to an Intel plant in Malaysia, according to Nikkei Asia. According to the report, Gelsinger said that the Corona pandemic had caused supply chains to collapse, while at the same time demand had increased by 20%. The resulting backlog of orders will continue, he said, as the build-up of new manufacturing capacity is not happening as quickly.
The management consultancy Roland Berger also comes to a rather pessimistic assessment. In a recent study, the company reports an increase in global chip demand of 17% per year, while supply is growing by only 6% per year. The auto industry is more affected by this shortage than other industries because 95% of it uses more mature chip technologies with larger geometries (40nm and larger). However, new production capacities are only being created in the area of leading-edge technologies, so they do not bring any relief to the auto industry.
Analogue chips and MEMS are the semiconductor segments where the longest shortages are to be expected. Since semiconductor factories are already running at 97% capacity on average, a rapid expansion of production is hardly possible.
The change in E/E architectures from dedicated ECUs distributed decentrally throughout the vehicle to high-performance domain and central computers would shift the demand profile of the automotive industry towards leading-edge technologies, the report says. However, this transformation will still take years. The situation is further exacerbated by the change in strategy currently being observed by OEMs and tier ones in manufacturing: instead of just-in-time with minimal inventories, the industry is switching to a “just-in-case” strategy and building up inventories again just in case. Which, of course, widens the gap between demand and supply – at least momentarily.
“The discrepancy between supply and demand of semiconductors is widening,” says Michael Alexander, Partner at Roland Berger. “There is no improvement in sight any time soon. This is because the bottleneck has structural reasons that lie in the current design of the supply chains. The shortage of chips will persist into 2023 – and probably beyond. The announced additional capacities are not sufficient to cover the demand.”
ttps://www.rolandberger.com/en/
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