"It will take a while to replenish the car industry's chip stocks"

June 01, 2021 // By Christoph Hammerschmidt
"It will take a while to replenish stocks"
The chip crisis continues to hold the car industry hostage, with production disruptions in many places because not enough chips are being supplied for the complex new electronics functions. eeNews Europe asked NXP's chief technology officer about the reasons for the malaise and possible counter-strategies.

Reger sees three trends that together have led to the current situation with allocation problems in the car industry. The most important driver of the crisis goes back to the first half of 2020 - at that time, numerous customers from the auto value chain scaled back or put their orders on hold under the impact of the Covid situation with pandemic-related manufacturing disruptions.

"It was completely unclear at the time how the recovery of the market would proceed - whether as a "V-shape" with a short dip and a subsequent rapid recovery or rather as an "L-shape", i.e. whether a longer down phase would follow after the crash," said Reger "After thorough consultation, we had given a cautious guidance to the market at the time. But just four weeks later - I had never experienced this before - we had to revise our forecast upwards because within this short period of time the ordering behaviour of the entire supply chain had turned around dramatically."

What had happened? The auto industry had seen that the market was collapsing and stopped ordering chips. So the foundries had to ask themselves who would pay them for the shortfalls when the orders from the auto industry fell away. They then gave their manufacturing capacities to customers in the consumer and mobile phone industries, because these were booming at the time - because countless office workers were suddenly working at home and had to upgrade their equipment accordingly. But then demand from the car industry suddenly picked up again - and hit an immovable obstacle in the form of the manufacturing processes in the chip industry. "It takes six to seven months to manufacture a semiconductor device - from the time you insert the wafer until a packaged and tested chip drops out of the back end. So until you reload the supply chain,


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