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Chip shortages have already delayed the production of 500,000 vehicles

2021-06-21T00:53:57.981Z


The European Association of Automotive Components (Clepa) does not rule out that the problems will continue until well into 2022


Image of the Ford factory in Almussafes (Valencia), this Wednesday.Biel Aliño / EFE

The gears of globalization may take time to turn as they used to. The problems in supply chains from the explosion of global demand that has followed the lockdowns have turned into an annoying headache for the sectors that need to integrate chips into their products. And the automobile industry is one of the most dependent: according to a report by the European Automobile Suppliers Association (Clepa), its deficiency has already delayed the manufacture of 500,000 cars worldwide and some brands have announced linked production cuts for this reason, as is the case with Ford at its Almussafes (Valencia) plant.

These semiconductors are basic, since the operation of the engine, the power steering, the door lock or the keyless car access system depends on them.

According to the Brussels-based entity, which groups 3,000 companies in the sector, a modern car can carry 100 electronic components and between 20 and 40 microcontrollers.

Currently they represent 35% of the cost of the vehicle, but it is expected that with the rise of autonomous vehicles and connected to the internet, that percentage will grow to 50%.

More information

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Faced with this scenario, Thorsten Muschal, president of Clepa, has essentially two messages for the future. One positive: "We believe the worst is over and the situation is not likely to deteriorate further." And another negative: "It cannot be excluded that the effects [of the shortage] will continue well into 2022." The crisis is affecting not only the manufacturers that use semiconductors, but also, indirectly, the rest of the suppliers, since if production is reduced, so do their sales. "The second quarter of 2021 has been very difficult, and we still see manufacturing disruptions and production delays," adds Muschal.

The automotive industry accounts for 37% of the demand for semiconductors in Europe, higher than that of the sector in the world as a whole, of 10%.

This has led the European Commission to set itself the goal of the EU going from 9% to 20% of the global share of chip production by 2030, a very complicated goal due to the enormous cost of starting this type of factories, whose entry into operation can take years since its construction is decided.

Dependence on Taiwan and China

The harsh entry barriers make it unfeasible to opt for European reindustrialization as the only way and it forces to combine investment with diversification of suppliers so that supply problems are not so pernicious. Between 60% and 70% of the chips in the automotive industry come from Taiwan and China. And although Europe has a solid design industry, La Clepa reports that its size has been reduced by 50% in the last ten years. "A more volatile business environment and a less stable geopolitical context invite the industry and the political class to reassess the resilience of the supply chain and the disproportionate dependence on certain countries or regions," says the entity.

Meanwhile, technology continues to advance. Margins are tight though: chip mills need to run above 90% capacity to be profitable. And smaller is usually synonymous with better, but also more expensive. Only the design of one of the most advanced chips, the five nanometer - a measure of length that is equivalent to one millionth of a millimeter - can cost 450 million euros, according to the document, compared to cheaper options such as 250 million that a seven-nanometer cost or the 150 million of a ten-nanometer. La Clepa considers it essential to maintain supply so that prices do not skyrocket. "Automotive suppliers will depend on competitively priced semiconductors to remain competitive in the global marketplace."

The list of victims far exceeds that of the automobile industry: companies of mobile phones, computers, airplanes, medical equipment or household appliances have also suffered the shortage to different degrees.

Source: elparis

All business articles on 2021-06-21

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