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Why There Is A Global Shortage Of Chips For The Automotive Industry

Carmakers BMW and Stellantis have warned that the global shortage of semiconductor chips that has hit the industry will continue this year and affect production and sales.

Why no chips?

Carmakers, which were forced to shut down factories last year due to the Covid 19 pandemic, face stiff competition from the widespread electronics industry for chip deliveries affected by a series of supply chain disruptions during the pandemic, BIZLife reports.

Stalantis chief financial officer Richard Palmer said the world’s fourth-largest carmaker did not expect an improvement in chip supply before the fourth quarter, with a total projected production loss of about 1.4 million vehicles by 2021.

BMW, which has so far been relatively less affected by the chip shortage than some of its competitors due to strong supplier relationships, has also warned that the second half will be more challenging for the German luxury carmaker.

“The longer supply bottlenecks last, the more likely the situation will be,” said Nicholas Peter, BMW’s chief financial officer.

“We expect that production restrictions will continue in the second half of the year, and thus an appropriate impact on sales volume,” he said.

The shortage could last until 2022

Other carmakers, such as Tesla and Ford, have acknowledged that there will be a shortage of chips in the foreseeable future.

“As we build steam-powered cars, the global chip shortage situation is becoming very serious,” Tesla CEO Elon Musk said last week.

German chipmaker Infineon Technologies also warned of a “dark picture”, saying it was struggling with extreme tensions in its markets as a pandemic disrupted production in Asia and supplies fell to a record low. Many expect that such a situation will last until 2022.

The biggest shortage of chips in the last three decades

The Ifo Institute for Economic Research said this week that the German car industry and its suppliers had faced the biggest shortage of chip supplies in 30 years.

The survey found that 83 percent of companies were affected, up from 65 percent in April.

“It leads to a cessation of production. “The shortage of semiconductors will continue for some time to come,” said Oliver Falk, a researcher at the institute.

The French lobbying group CCFA-PFA warned a few days ago that the global shortage of chips and the new rise of coronavirus patients reduce the prospects for a strong recovery in the French car market, reports BIZLife.