Chip bottleneck continues to thwart auto industry recovery

January 28, 2021 // By Christoph Hammerschmidt
Chip bottleneck continues to thwart auto industry recovery
The car market will recover this year with annual sales of 84 million vehicles - in principle, anyway. If it weren't for the continuing supply shortage of semiconductors. The hardest hit is the production of semiconductor components made on 12-inch wafers, says market researcher TrendForce.

The auto industry's crash in 2020 due to production shutdowns caused by the Covid 19 pandemic was followed by a surprisingly quick recovery - TrendForce expects annual vehicle sales to increase from 77 million units in 2020 to 84 million units in 2021. At the same time, the rising popularity of autonomous, connected and electric vehicles is expected to lead to massive consumption of various semiconductor components. However, the procurement activities of the automotive industry across all hierarchical levels of the value chain have not kept pace with the partly unexpected increase in demand. This is exacerbated by the fact that most manufacturers in the supply chain currently only have relatively low inventories as a late consequence of the weak demand in the previous year. This results in bottlenecks in production with the consequence that significantly fewer vehicles can currently be delivered than the existing production capacities would actually allow.

The current bottleneck situation in the IC supply chain has gradually spread from consumer electronics and ICT products to the industrial and automotive markets. In the past, manufacturers in the automotive semiconductor industry were mainly based on IDM or fab-lite business models, such as NXP, Infineon, STMicroelectronics, Renesas, ON Semiconductor, Broadcom, TI, etc. As automotive ICs typically operate in a wide temperature and high-voltage range, have a relatively long product life cycle, and have high reliability and longevity support requirements, it is more difficult for the industry to move its production lines and supply chains elsewhere.

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