Chip shortages hit global car makers

Chip shortages hit global car makers

Business news |
By Nick Flaherty

Chip shortages have hit car makers around the world, with production in Europe and the UK hit.

eeNew Automotive highlighted this issue back in December with shortages at VW, and now Audi and Mercedes.

Ford, Toyota,  Fiat Chrysler (now part of Stellantis with the Peugeot-Citroen PSA Group) and Nissan have all said they would cut vehicle production this month due to a shortage of semiconductors. This morning saw Toyota stop four production lines at three plants in Japan as a result, and Honda in the UK will close for four days as a result of the chip shortages.

Major automotive silicon supplier NXP late last year wrote to car customers highlighting chip shortages and price increases. “To address the unforeseen increase in costs from our suppliers, we reluctantly must raise pricing on all products,” said the letter, seen by Reuters. Nvidia pointed to the boom in GPU shipments to gaming and laptops as a contributing factor.

The pandemic caused significant sales declines in the automotive industry worldwide last year, and chip makers shifted to consumer silicon as a result. This has lighlighted the vital imporance of the semiconductor supply chain for the industry. With more connected vehicles and more processing in cars, that will only become more significant going forward both for production and relibility, as the recent Tesla recall around embedded flash memory showed.

“The car makers made matters worse by shutting off their suppliers and [didn’t see] while it’s a picosecond to cancel any orders it’s a four to six month lead time to turn supply back on again,” said semiconductor analyst Malcolm Penn of Future Horizons.

“Most semiconductor manufacturers need over 80% throughput in their pipeline to avoid making a loss, this means they must be as dynamic as they can to fill market need and their production lines,” said Jamie Broome: Senior Director of Product Management for Automotive at IP supplier Imagination Technologies. “With most of the world working from home or being in quarantine this year, consumer spending on games consoles, televisions and home electronics have filled the gaps in semi-conductor production. Another area that has taken advantage of this extra capacity is the makers of AI chips, many of which are actually destined for automobiles.”

“Not all silicon is the same though. This is what can contribute to the delay in a demand increase as semiconductor manufacturers need to retool and recalibrate the production facilities for automotive chips, produce and then ship a finished product. This will mean around six months of delays before supply is back to normal,” he added.

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