An ongoing global shortage in the supply of semiconductor chips continues to affect automotive production and the delivery of new cars to customers.
Today’s cars can use up to 1,400 chips to manage the various systems. These semiconductor chips are used in a variety of ways, from simple functions such as operating electric windows to more complex screens and advanced driver assistance systems such as adaptive cruise control.
Depending on the shortage of chips, some manufacturers are forced to temporarily suspend or change the specification of certain models. Some car buyers are faced with increased costs if they need to upgrade to other specification packages or take cars with alternatives to the vehicles originally ordered.
The French automaker Peugeot has already confirmed that the production of its 308 hatchback, which will soon be replaced by a new model, will have to switch to the use of exclusively analog instrument dials. Some brands use systems in which missing components are retrofitted at dealerships.
Every manufacturer is affected in different ways and to different degrees. Worldwide, Ford predicts that it will produce 1.1 million fewer cars. In Europe, Ford is reducing production of the popular Focus along with a different suspension of production of the Galaxy, S-Max, Kuga, Mondeo and Transit Connect models in July.
Jaguar Land Rover had to temporarily close both its Castle Bromwich and Halewood factories at the end of April due to delivery bottlenecks. JLR said at the time, “Like other automakers, we are currently experiencing a supply chain disruption from Covid-19, including global availability of semiconductors, which is affecting our production plans and our ability to meet global demand for some of our vehicles.”
However, not all manufacturers are affected by the ongoing crisis. Having previously experienced massive disruptions related to the Fukushima disaster, Toyota had already developed a robust business continuity plan that required its inventory to hold components for two to six months.
Industry experts have predicted that we may not have seen the worst effects yet as many automakers were already working reduced shifts due to the Covid-19 pandemic. As factories try to get back to full operating capacity, supply shortages may have ramifications that could last into the rest of 2021.
Auto Trader’s Commercial Director Ian Plummer said, “It is worth remembering that the performance we are seeing now is based on a significant number of orders placed prior to the semiconductor shortage taking effect. It is therefore likely that the full effects will become more apparent in the months ahead. “
Some industry analysts have predicted that production loss could reach four million units in 2021, with the total cost to the automotive sector exceeding £ 77 billion.
The automotive industry is only one sector hit by the scarcity and one of the smaller players in the global semiconductor market.
Home computers, TVs, game consoles and 5G-enabled smartphones all rely on the chips, with companies like Samsung and Apple reportedly spending £ 26 billion and £ 42 billion on the chips, respectively. With no solution in sight, the consequences are likely to last until 2022.
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