{"id":20966,"date":"2023-01-18T16:59:00","date_gmt":"2023-01-18T21:59:00","guid":{"rendered":"https:\/\/a2globalelectronics.com\/?p=20966"},"modified":"2023-01-30T15:15:17","modified_gmt":"2023-01-30T20:15:17","slug":"whats-driving-the-continued-automotive-chip-shortage","status":"publish","type":"post","link":"https:\/\/a2globalelectronics.com\/ja\/shortage-mitigation\/whats-driving-the-continued-automotive-chip-shortage\/","title":{"rendered":"What’s Driving the Continued Automotive Chip Shortage?"},"content":{"rendered":"

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While other industries that use chips are seeing demand slow, allowing semiconductor manufacturers room to catch up, some automotive chips are still in short supply. <\/strong><\/h2>\n

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Rapid growth in demand, technological advances in chip design, and lingering effects from the pandemic have pushed automakers to rethink their supply strategy amid a shortage market.<\/p>\n

The past few years haven\u2019t been easy for automakers. Growing consumer demand and supply chain constraints have upended the automotive industry. Limited chip supply has impacted the industry broadly. Production targets are now routinely revised to account for fewer vehicles being produced. This year alone the automotive industry estimates it could lose up to 3 million units of planned production<\/a>. Manufacturing lines have been paused and vehicles have been shipped to dealers missing certain features because OEMs have been unable to source the necessary chips.<\/p>\n

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The perfect storm of rising demand and decreased chip production continues to strain an already tight market.<\/p>\n

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What is Causing the Automotive Semiconductor Supply-Demand Mismatch?<\/h3>\n

When the COVID-19 pandemic cratered demand for cars and trucks in March 2020, automakers began to cut forecasts for sales and in turn, canceled orders for chips. At the same time, the demand for PC and smartphone chips skyrocketed, so semiconductor manufacturers took on these more profitable, higher-volume orders. Once the initial pandemic wave passed, demand for automobiles surged, but automakers were left flat-footed since chip manufacturers had limited chip production capacity. Automakers had, essentially, lost their place in line.<\/p>\n

Even before the pandemic, the growing market for electric vehicles (EVs), more feature-rich cars, and advanced tech like autonomous driving and bluetooth connectivity were putting pressure on fabs to manufacture an increasing number of chips<\/a> for the automotive industry each year. In fact, only five years ago the average dollar amount of semiconductor content<\/a> in a vehicle was $1,500. Today, that number is somewhere between $5,000 and $8,000.<\/p>\n

In short, at a time when automakers and chip manufacturers are playing catch up, the demand continues to grow for more and more automotive chips.<\/p>\n

What is the Automotive Chip Outlook for 2023?<\/h3>\n

As Hassane El-Khoury, CEO of Onsemi, put it bluntly<\/a>, “there’s nothing you can do now to change 2023\u201d. The bottom line: automotive chip shortages will persist at least through 2023. Effects on manufacturers are uneven, though. BMW and Mercedes are reporting no significant supply chain issues, while Honda, Toyota, and GM are anticipating fewer production units due to constrained chip supply<\/a>.<\/p>\n

There is some hope the automotive chip shortage might ease at some point in the near future. Last year, the U.S. earmarked<\/a> $52 billion for semiconductor research, design, and production in a bid to expand domestic chip manufacturing. However, this new production capacity won\u2019t give any relief to automakers until these new facilities come online, which will take at least 18-24 months. Given that, the ongoing chip shortage will almost certainly affect the production of vehicles this year. And because EVs <\/a>can use up to 30% more chips than gas-powered vehicles, a disproportionate number of those affected vehicles will be electric.<\/p>\n

What Can Automakers Do To Find Solutions To The Automotive Chip Shortage?<\/h3>\n

A new matrix is emerging wherein OEMs are taking more control over their supply chain. Historically, they have outsourced supply chain management to electronic manufacturing service (EMS) companies or contract manufacturers. In doing so, they have become disconnected from their direct supply chain. Going forward, it seems that automakers will favor a hybrid approach to supply management and procurement. In addition to working with EMS companies, it is likely they will also develop and nurture relationships with independent distributors and fabs directly.<\/p>\n

Regardless of the partner setup, OEMs should be focused on building a responsive, agile, and resilient supply chain. Planning exercises should consider the long term horizon with already-vetted backup suppliers in place should parts become unavailable. Procurement strategies should be designed to secure a more proactive purchasing position. Given the projected growth<\/a> of the automotive chip market, acting now to shore up supply lines will be especially important as the volume of chips needed in automotive production units continues to expand.<\/p>\n

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