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The automotive industry cannot get enough of that right now:
Trainee in a Global Foundries chip factory in Dresden with a silicon wafer for semiconductor production
Photo: Juergen Maennel / imago images / ddbd
1. Where exactly is the problem?
The car manufacturers have been hit by a development that has been evident for a long time: the demand for computer chips has been growing rapidly around the world for years. However, several factors have recently exacerbated the situation: On the one hand, the corona pandemic with home office for millions of people and evening entertainment in front of screens. The lockdowns also led to delivery problems for silicon, the most important raw material for semiconductors. And then at the beginning of 2021 there were natural disasters that led to production losses at large chip manufacturers.
New factories are being planned, for example at Samsung and also at the US giant Intel.
However, such chip manufacturing plants need a few years to get up and running: The production of semiconductors requires highly specialized machines and the same personnel, both of which are scarce.
2. Why is the automotive industry particularly hard hit?
At the beginning of the corona pandemic, car manufacturers canceled orders from chip manufacturers. Because many automakers feared a sharp drop in sales. That was a bit of a fallacy, because in the second half of 2020 car sales picked up again strongly worldwide. Strategically, the cancellations were a mistake for the automotive industry: because many chip manufacturers quickly rescheduled and their production facilities were used to capacity with orders from other industries. The caution is now taking revenge for the carmaker - because now the already scarce chip production capacities are being used elsewhere.
In addition, orders from the automotive industry are challenging for chip manufacturers, but only produce comparatively small quantities.
How comparatively low the market power of the carmaker is at the moment can be seen in the balance sheet of the world's largest chip contract manufacturer TSMC: In 2020, only 3 percent of the Korean chip giant's sales came from automotive contracts, shows a study by the management consultancy Roland Berger.
A whopping 51 percent of TSMC sales came from the smartphone sector.
3. What is the concrete impact of this on the car manufacturers?
Whether Daimler, Volkswagen, the big US automakers Ford and General Motors or the auto giant Stellantis, which emerged from PSA and Fiat Chrysler: All manufacturers stop the production lines in some plants for a week because semiconductors are missing. The VW Group recently stated that around 100,000 vehicles could not be built worldwide in the first quarter due to the semiconductor shortage. Stellantis speaks of 190,000 vehicles, Daimler in turn is maintaining production of the S-Class and the EQS continuously, but sometimes with the E-Class, for example, lets factories stand still for days.
Worldwide, the management consultancy Alix Partners recently showed in a study that 3.9 million vehicles fewer than planned are likely to be built this year due to the semiconductor shortage. How much the delays lead to actual costs is a matter of dispute. After all, the vehicles are not built, so they don't have to be parked in parking lots and completed later. The automakers then simply sell tens of thousands or hundreds of thousands of vehicles less, the net profit of which after deducting all costs is comparatively low. The automakers also compensate for the loss of earnings by keeping the prices for the vehicles built and sold more stable than usual - i.e. granting fewer discounts or no discounts at all.In this respect, the semiconductor shortage poses challenges for production, but is by no means reflected one-to-one in real costs for the corporate coffers.
At least in Germany, breaks are cushioned with short-time work, which means up to 40 percent less net income for employees.
Short-time work benefits and social security contributions are paid by the employment agencies.
4. When will the bottleneck resolve?
Volkmar Denner, CEO of the world's largest auto supplier Bosch, recently spoke of difficult months that are still ahead. "The situation could remain tense until 2022," Denner told the "FAZ". The world's largest chip contract manufacturer TSMC intends to invest between 25 and 28 billion dollars this year, a large part of which is to go into the development of new technologies and thus also new plants. The US chip giant Intel also wants to significantly expand its production capacities and get into chip production: Intel plans to invest up to $ 20 billion in two new plants in Arizona.
Possibly Intel is also building a large chip factory in Germany. The US giant wants to participate in the European semiconductor alliance, with which the dependence on Asian manufacturers is to decrease. Intel's European work is said to cost up to ten billion euros, but Intel makes this dependent on government funding. In South Korea and Taiwan, about 40 percent of the construction costs are covered by the state, Intel boss Pat Gelsinger recently said in the Handelsblatt. Intel also needs this level in Europe "in order to be competitive".
The catch with all these announcements, however, is: Since the construction of chip factories takes at least several months and more likely several years, this does not give car manufacturers any relief in the short term.
And the hunger for semiconductors is unlikely to decrease: a study by Roland Berger estimates that the proportion of electronic components in cars is likely to double by 2025.
The strongest driver when it comes to semiconductors in cars are electric drives - which all car manufacturers have to sell more in order to meet the EU's climate targets.
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