Global semiconductor shortage may stretch to 2023

Highlights

  • The COVID-19 pandemic-induced challenges have badly hit the manufacturing and supply of semiconductor chips in the global market.
  • The worsening global chip shortage is causing harm to the production lines of the global automotive industry.
  • There remains high probability of the supply hurdle to widen in the coming months and into 2023.

The COVID-19 pandemic has stirred unrest across the world. The consequent lockdowns and movement restrictions have further impacted the functioning of each and every industry.

The chain reaction includes the semiconductor supply constraints in the global market. The disruption in the supply chain has also been impacted by geopolitical tensions and increasing demand for silicon chips in various industries.

It all started in 2020 when the COVID-19 pandemic led to a global spending spree on electronic items and factory closures hit the supplies.  

Semiconductor supply crunch hits auto industry

Silicon chips or semiconductors are an intrinsic constituent of the machinery of present-day motor vehicles. Therefore, the continuous shortage of semiconductors has hit the automotive industry severely.

Over the past few months, the gap between demand and supply of semiconductors has been stretching wide.

Image source: © Olivier26 | Megapixl.com

Related Read: Semiconductor Shortage Chipping Away at EV industry Production

Below we have explained how the worsening global chip shortage situation is taking a toll on production lines of the automotive industry in different parts of the world.

  • General Motors halts production
    A renowned player in the automotive industry, General Motors Co. has announced to reduce production capacities across its units in North America as a consequence of the persisting supply crunch of In early September 2021, the largest US automaker unveiled its plans to expand the downtime for about two weeks at eight of its plants across Mexico, the US, and Canada. 

Interesting watch: Can a tiny chip scarcity halt the Automobile industry operations?

  • Tesla defers Roadster’s delivery to 2023
    Tesla founder Elon Musk has also postponed the delivery of its highly anticipated sports car Roadster to 2023, owing to worsening shortages of semiconductors. Roadster is Tesla’s concept model powered by SpaceX rocket thruster that can pace up from 0 to 60 mph in mere 1.1 seconds.
  • Volkswagen feeling the heat

Volkswagen is struggling to address the impact of chip shortage. Owing to the challenging situation, Europe’s largest carmaker is losing market share in China. Moreover, Volkswagen boss Herbert Diess has highlighted that the semiconductor supply constraints could last for the next months or even years.

  • Automobile sales skid

Given the worsening global chip shortage, automakers across the globe have witnessed cuts in their vehicle sales. 

Related Read: Semiconductor chips shortages impact June’s sales figure of Ford Motors

Will the supply crunch continue till 2023?

With no recent increase in the manufacturing process of semiconductors, there remains high probability of its supply hurdle to widen in the coming months. Moreover, demand for semiconductors remains high amid stiff competition being posed to the automotive industry from the sprawling consumer electronics industry.

Image source: © Kadmy | Megapixl.com

During the recent IAA Munich auto show, executives from the automotive industry highlighted that the semiconductor supply crunch could get worse and spill over into 2023.  

Bottom Line

The shortage of semiconductor chips has badly hit the auto industry. It is certainly going to take a longer time to rebalance demand and supply and restore their inventory to regular levels. However, a combined effort by all the stakeholders from across the world may provide some respite from the current global shortage of silicon chips.

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