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Just like cars and trucks are going digital, the semiconductor shortage is causing billions of dollars to be lost to the auto industry. Why is this happening and how to move forward? Big car manufacturers have already announced a major shutdown, cutting revenues expected in 2021 by billions of dollars.
Just like cars and trucks are going digital, the semiconductor shortage is causing billions of dollars to be lost to the auto industry. Why is this happening and how to move forward? Big car manufacturers have already announced a major shutdown, cutting revenues expected in 2021 by billions of dollars.
This challenge in the automotive industry is the latest in a series that began in the first months of the COVID-19 pandemic when car sales fell by as much as 80% in Europe, 70% in China and almost 50% in the United States. The lack of demand for new cars caused factories to shut down and to retire millions of workers, while orders for semiconductors - used in many ways, including fuel pressure sensors, digital speedometers, and navigation displays - plummeted.
The effects of the semiconductor shortage have extended beyond the automotive sector with other industrial players fighting to protect the chips. This underlines the fragility of these supply chains, which rely heavily on Asia as a semiconductor manufacturing center. Many car manufacturers are now operating in crisis mode and are unlikely to expect a quick fix. Both car manufacturers and chip makers will need to work together to deal with the imbalance in demand.
The semiconductor industry has matured in recent years through consolidation and scaling up. Its power grew moderately but steadily - by about 4% per year in line with sales, and the use of semiconductors in the last decade was also consistently high (at 80% or more). Their use in 2020 was close to 90%, which many industry leaders consider full use - exceeding this level often results in disproportionately longer implementation times. For this reason, its total capacity at the current high utilization rate is almost exhausted, even though the semiconductor industry has increased its production capacity by almost 180% since 2000.
Dealing with the autoconductor shortage
Automotive and assembly
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