Won't the semiconductor shortage end before 2022? The fault of the automotive
The shortage problem was strongly influenced by the pandemic. The crisis has in fact upset the semiconductor market, creating a sharp bifurcation in demand. Due to physical confinement and the lockdown, demand for automobiles has plummeted and carmakers have reduced their orders to almost zero. At the same time, we have seen a sharp surge in demand for computer and data center chips and hardware. This "split" has led to a series of rapid fluctuations in producers: in an industry that requires careful planning and long delivery times, this has created an imbalance that will take some time to remedy.
The issue is not limited to manufacturing, but extends to other fields: the scarcity of wafers and packaging substrates exacerbates the problem. In other consumer industries, such as appliances, shortcomings like this can be more easily addressed: companies can simply place orders from other manufacturers to meet temporary spikes in demand. Or you can use less advanced components. But, for car manufacturers as well as for hi-tech components, these solutions are not considered. In the automotive sector, it normally takes three to six months, and sometimes even more, to verify the correct implementation of the chips coming from a new factory. It is also unlikely that other producers will be approached for what may be only temporary peaks in demand. Ultimately, the best option for both industries is to push for an increase in production of the already active supply chains.
So chip makers have increased production on their existing lines, although the majority of factories are already operating over 90% of capacity. In an effort to expand production further, they are looking to change rates on existing machines - that is, they are attempting to deliver hardware already ordered in advance and, subsequently, get more results from the same supply chains.
Ars Technica dedicated a focus on the automotive market. "There seems to be a broad consensus that it will stabilize by the end of the year - Chris Richard, principal in analyzing Deloitte's supply chains and network operations, told the US magazine - But if I go back to 2008 and to the financial crisis, it was a couple of years after the start of the recovery that everything was back to normal ”. The current crisis is also the result of the specifics of the contemporary automotive market. If fossil fuel-powered vehicles already use a lot of components, electric vehicles promise to use more. Above all, the uptake of Advanced Driver Assistance Systems (ADAS) is expected to increase significantly in the coming years. "The coincidence of chip shortages and electrification will change the way automotive executives view their relationship with semiconductor manufacturers," Richard confirmed. Automakers are likely to work more closely with chip companies in the future. , even if the parts of the car are made up of parts from different suppliers. ”
It is precisely this heterogeneity that aggravates the problems of automotive companies. Over the years, with the implementation of more advanced technologies, car manufacturers have outsourced the production of more and more parts to different suppliers. A trend opposite to computer and electronics companies, which instead often interact directly with semiconductor manufacturers. “It's a big confusion,” Richard said. A confusion that weakens the automotive market: this represents less than 10% of the semiconductor market.
Making chips is a slow process. Even when production capacity is in place, it can take up to 26 weeks to produce a chip from the time an order is placed. Falan Yinug, director of industrial statistics and economic policy at the Semiconductor Industry Association recalls that "this is just the physics of chip manufacturing […] Good news is coming, but the process cannot be accelerated." Nevertheless, some companies have reacted to the shortage more readily than others: this is the case of Toyota which, thanks to its experience following the 2011 Fukushima earthquake and tsunami, has developed a storage-resources plan that covers the company's needs from two to six months.
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