Global consulting firm AlixPartners estimated last month that car-makers will lose about $US110 billion ($A142b) of sales this year due to the shortage of semiconductors, almost double an earlier projection according to a story in Go Auto News.
Tesla boss Elon Musk this week tweeted that the chip shortage was making car production difficult and blamed some companies for over-ordering the chips. His tweet read: “Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it. Fear of running out is causing every company to overorder – like the toilet paper shortage, but at epic scale.”
He said the chip shortage was a “huge problem” and one of the most difficult supply chain challenges the company had ever experienced.
Taiwan Semiconductor Manufacturing Company (TSMC), which is completing the build of a $US12 billion ($A15.5b) semiconductor plant in the US, said it plans to increase production of microcontroller units by 60 per cent this year.
But a survey by Automotive News found that chip companies, car-makers and their parts suppliers have warned chip supplies will remain tight into next year.
The issue started mid-2020 when car-makers predicted a downturn in sales caused by the pandemic and told suppliers to reduce production. This covered components including the chips.
But the prediction was incorrect. Car demand rocketed as customers sought personal transport to avoid contact with other commuters and reduce any possibility of catching the virus.
Car makers turned up their requests for stock to fulfil the new wave of demand but for the chip manufacturers, who had already found replacement buyers in personal consumer products such as power tools, mobile phones and computers, the car company orders came too late and the auto industry missed out on production slots.
The situation was not helped when a fire stopped production at major semiconductor maker Renesas Electronics’ Naka plant in Japan on March 19.
The Volkswagen Group said the second quarter of this year will be “our biggest challenge” and it expects chip supply to remain tight and cannot see it returning to normal until perhaps the end of this calendar year. Volkswagen’s output is already 100,000 vehicles behind its normal annual production level.
In April, Daimler cut working hours for up to 18,500 employees and temporarily halted production at two plants – one making the C-Class which is Mercedes-Benz’s best seller – in Germany due to the chip shortage.
Jaguar Land Rover paused production at two UK factories in April, partly because of the shortage of computer chips.
The problem in sourcing sufficient chips also led to Hyundai suspending production for a short time at one of its factories in South Korea that makes cars including the Ioniq 5 EV.
Delays in Hyundai and Kia production are slowing Australian customer deliveries of some models, though both companies stress the delays are relatively minor.