Chip Shortage Slowing Down the Automobile Industry

7. August 2021 | Technologies

The COVID-19 pandemic HAS revealed the weaknesses in the international supply chain. This is also affecting the automobile industry.

As a result of the Covid-19 pandemic, German and international automobile manufacturers have become painfully aware of the vulnerability of long supply chains: Since the end of last year, silicon semiconductor computer chips have been in short supply. Without them, things grind to a halt in the automobile industry as they control numerous functions, from the engine to the navigation system.

To a large extent, the starting point of the crisis was the automobile branch itself. Due to COVID-19, the plants were shut down, leading the predominantly Far Eastern chip manufacturers to develop other outlet channels. They found these among the producers of entertainment electronics, and also computers. In these areas demand remained stable, or indeed increased, due to people working from home.

Now, while automobile production has recommenced, it is being repeatedly forced to a standstill by the shortage of chips. According to the consulting firm Alix Partners, the lack of these components is likely to cost the international automobile industry 110 billion dollars in turnover. The German Association of the Automotive Industry (VDA) recently revised its automobile production forecast downwards, describing the shortage of chips as an ongoing hindrance for production. Insiders report that chip producers intend making more capacity available to supply the branch, according to the semiconductor-specialized Taiwanese website DigiTimes. But when presenting their half-yearly figures, BMW and Daimler Benz still noted that the supply bottlenecks were likely to be making themselves felt for the rest of the year.

In order to be equipped for future crises and to remain internationally competitive, the research, development and production of microelectronics need to be expanded in Europe. A reminder to this effect was issued recently by the German Electrical and Electronic Manufacturers’ Association (ZVEI). A possible alternative for many applications which currently depend on semiconductors containing silicon is gallium nitride. Chips made of this material are faster and more energy-efficient than those conventionally made of silicon. In addition, they can be produced in the same factories without major disruption.

Photo: iStock/Jae Young Ju

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