Global autoship shortage, exacerbated by confined gamers, set to recover soon
The automotive semiconductor shortage was caused in part by demand from annoyed gamers trapped at home by coronavirus lockdowns, but will likely be over by the end of the year.
The first reports had suggested that the shortage in the auto industry could disrupt production until 2023.
Chip prices for automakers will increase in the short term. Volkswagen will be hit hardest by the shortage, while Toyota appears to be the least hit. Hyundai / Kia of Korea and BMW have gained good long term access to chip requirements and will weather the storm with ease as well.
“The shortage of semiconductors (microchips) is disrupting automotive production and could delay the recovery of new vehicle sales and the profitability of the sector. Automakers are cutting production and running factories selectively until the shortage subsides, which is expected to take several months, Fitch Ratings said.
Last month, Fitch Solutions, a separate entity from Fitch Ratings, estimated that this could be much more serious and last for a few years.
“It is difficult to say exactly how long the semiconductor shortage will last, however, based on our estimates, we believe the shortage may continue until early 2023,” Fitch Solutions said in a report at the time. Fitch said the industry has failed to update its supply chains from the so-called “just-in-time” model to a more diverse system, while next-generation vehicles demand more semiconductors, which means more semiconductors are needed. which could lead to a shortage of problematic vehicles. risk on sales growth, certainly in 2021.
Investment bank UBS was in the positive camp, saying it was increasingly likely that the supply-demand balance would improve from around the summer of 2021, while prices would rise by around 10 %.
“We believe Toyota has felt virtually no impact due to the internal systems that allow it to monitor the entire supply chain, including materials. Hyundai / Kia and BMW have indicated that they have secured the semiconductor inventory and will not be affected in the near future. However, component companies such as Bosch and Continental have been constrained and VW, which has a heavy production weight in Germany, has cut production sharply, ”UBS said in a report.
Dev Rai, vice president of global sourcing at Sourcengine, said previous shortages have been in one product – memory chips or multi-layered ceramic capacitors – but this time it’s all a problem. Rai said COVID-19 has caused several factory closures across many industries.
“But now we are seeing all the sleepy industries waking up and demand going from zero to 100,” Rai said.
“These industries have a huge demand to make up for lost time, but semiconductor processing facilities are struggling to meet those needs. As a result, manufacturers have increased their prices – citing their higher production costs – and their customers are stuck between accepting new prices or not getting their allowance, ”said Rai.
Automakers find themselves competing with other industries that saw demand increase during the global lockdown, according to Fitch Ratings.
“The increased demand for consumer electronics during the lockdowns has resulted in a global shortage of microchips, first reported in December 2020. The situation is particularly dire for automakers, which are experiencing a sharp increase in demand for electric vehicles, while chipmakers often reserve supply for more important technology. companies. The shortage is disrupting auto production in most areas, leading to sporadic slowdowns and selective plant closings, although the overall scale and magnitude of the problem is not yet known. We expect the disruption to continue for several months and dissipate by the 2sd half, ”said Fitch Ratings.
“The shortage could delay the recovery of the auto sector after the pandemic-related demand drop, although we expect most of the lost production to be recovered in the second half of the year.
Some positive news from Taiwan, which has said its major chipmakers will prioritize supplies from automakers.