Shortage of semiconductors, towards a disaster scenario?

The shortage of semiconductors still strongly impacts the automotive industry. We will still have to wait before a return to normal.

This is a situation that has been going on for over a year now. The shortage of semiconductors is weakening a large part of the world economy, and more particularly that of the automotive industry. Several forecasts estimated a back to normal for the second half of 2022. What is it really ?

A return to normal before the end of 2022?

Many builders are hoping for a significant improvement in the coming months. Estimates are counting on a return to normal from the summer of 2022. But this resumption of production will be smooth. The various studies do not provide not a return to normal before the first quarter of 2023. The builders, and the various manufacturers, have organized themselves in order to maintain a production rate. But the situation will remain tense until the end of the year. The head of acquisitions at Volkswagen, Murat Aksel, moreover specified that this “volatile situation will affect the sector beyond the first half of this year”.

For his part, the boss of the Bosch company, world’s leading equipment supplierhinted at the start of the year that it was likely to return to pre-crisis volume from the start of 2023. The situation is therefore on the way to improvement, even if manufacturers are having to deal with new shortages .

“We can’t manage the supply chain for these key components like we used to” Jim Farley, Ford CEO

The crisis could last until 2024

If manufacturers are confident, politicians are more skeptical. This is notably the case of the American government, which warned on May 31 that the crisis could still lengthen in time. The Secretary of State for Commerce, Gina Raimondo, expressed a much more pessimistic view. “I don’t see the chip shortage easing significantly next year. During my trip, I summoned a dozen CEOs to South Korea, and they all agreed that we had to wait until late 2023, or even early 2024, to see any real improvement”.

The US government believes that real demand, globally, has been underestimated. The massive arrival of electric vehicles is particularly taken into account by the American authorities, who are therefore considering a back to normal in 2024. One thing is certain, builders are more optimistic than subcontractors on the date of a potential return to normal.

What are the consequences of the semiconductor shortage?

According to figures provided by the firm LMC Automotives, the shortage of electronic chips would have impacted the production of several million vehicles. For the manufacturer Ford, the firm estimates that 1.25 million vehicles could not be produced. Similar figures for European manufacturers since the firm estimates at 1.15 million shortfall in production for Volkswagen, and 1 million cars for the Stellantis group. The shortfall is colossal so for manufacturers, this shortage of semiconductors has caused sales to drop dizzily. The only exception to the picture, Hyundai. The Korean manufacturer is one of the few to have emerged a winner from this situation. This is due to their proximity to chip producers in Asia.

To face the crisis, investments are multiplying. Europe will invest 43 billion euros in the next few years. This plan aims to quadruple chip production in Europe by the end of the decade. Many countries have also invested on their side, in order to produce more. This is particularly the case of Spain which will invest 12 billion in semiconductorsto increase its production over the next three years.

A shortage of semiconductors that is still far from over.

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