Foreign media: about the shortage of chips or it will last for several years

Previously, the industry believed that the global chip shortage problem would be resolved soon, but now it seems unlikely.

Previously, automakers and analysts have been optimistic that the global chip shortage will be effectively resolved in the second half of this year, but facts have proved that the situation is not that simple.

Peter Schiefer, President of Feiling Automotive Division, lamented that he has worked in this industry for 31 years, but this is something he has never experienced before. In his view, the chip shortage problem will not be solved in a short time. It takes a long time to purchase and produce chips, let alone build a new production line.

From Japan to Europe to North America, automakers have been forced to stop production for days or weeks. Some automakers, such as General Motors and Ford Motors, have adopted the practice of removing key components from their cars in order to keep their factories running. Some other companies have shifted from a strategic perspective to manufacturing high-margin cars, but the cruel fact is that those high-margin models often use scarce microprocessors more.

IHS Markit senior automotive semiconductor chief analyst Phil Amsrud pointed out, “In the short term, the key is to squeeze more capacity out where you can do it.” He and other experts said that in the long run, automotive The industry will have to reconsider how to purchase semiconductors and wait for the government and chip manufacturers to fulfill their promises to increase production capacity-a process that will take several years.

LMC Automotive analyst James Norris is equally outspoken. He said that the latest information shows that production interruptions are more serious than initially thought, and supply shortages are expected to continue into the last few months of 2021.

Ondrej Burkacky, head of McKinsey’s global semiconductor business, warned that this status quo may result in a reduction of 2 to 3 million vehicles worldwide this year. According to data from AutoForecast Solutions, North America may lose 719,000 vehicles this year. LMC predicts that the shortage of chips will cause the loss of 330,000 cars in Europe. The main losses are Daimler, Ford, Renault and Volkswagen Group.

Even if the tight supply situation began to ease in the third quarter, due to seasonal changes in semiconductor demand, potential hidden dangers are still there. 'Black Friday' and 'Double Eleven' in the United States are coming soon, when buyers will snap up consumer electronics products. Burkacky said: 'This will usher in the peak period of chip demand. I expect it will be more difficult in the second half of this year.'

According to analysts, the global semiconductor market is huge, with an estimated market value of about 450 million euros, but automotive applications account for only 10% or less of it.

Current automotive systems almost all rely on semiconductors, from power electronics that control the energy flow of electric vehicles, to advanced driver assistance systems, to infotainment systems and sensors that control the lights in the car. McKinsey’s Burkacky said that due to the increase in chips required for each car, even if car production declines, the total annual demand for automotive chips will increase by about 5%.

Strategy Analytics, an automotive semiconductor consulting company, estimates that by 2027, the total chip market size will reach $66 billion, almost twice the size of 2020.

As for how to alleviate the problem of chip shortages, some analysts have proposed that before the new production capacity is put into production, the auto industry can alleviate supply problems by changing some of the procurement methods. For example, companies can separate chip purchases from other components, or they can choose to complete purchase orders in advance, build buffer stocks, or even continue to order chips during periods of sluggish car sales.

Although the automotive industry emphasizes just-in-time production, semiconductor manufacturing is a very complex and time-consuming process. Therefore, automakers must realize that they are competing for resources and need to reconsider how to purchase semiconductors.