Chip shortage: Experts expect restrictions until at least 2024

Created: 2022-11-10, 06:00

By: Simon Mones

Chips for the production of cars are still in short supply.

There is no improvement in sight, on the contrary, even in 2024 demand will still exceed supply.

The auto industry is in the midst of the greatest upheaval in its history.

The lack of chips is still causing restrictions in production and long waiting times for new cars.

First it was the corona virus and then the war in Ukraine that paralyzed the supply chains.

However, there is no improvement in sight, according to an analysis by the management consultancy Alix Partners.

According to some experts, it became apparent early on that the lack of chips would also be an issue in 2022.

According to Alix Partners, the restrictions on car production due to the shortage of semiconductors will continue "at least until 2024".

It currently takes six months from ordering to delivery of the chips.

Usually it's only three months.

In 2024, semiconductors for car production will still be in short supply.

© Sven Hoppe/dpa

Chip shortage: Experts expect restrictions until at least 2024

The problem: Due to increasing digitization and electrification, the demand for chips continues to grow, while semiconductor manufacturers are reluctant to expand their capacities due to the looming recession and rising interest rates.

By 2026, the demand for analog chips needed for electric drives will increase by 75 percent, and by 30 percent for wafers for microcontroller units.

However, the semiconductor manufacturers planned only 56 percent or twelve percent more capacity in these areas.

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According to Alix's analysis, the semiconductor manufacturers' profit margins for conventional car chips are up to eleven percentage points worse than for chips for consumer electronics or industrial customers.

In addition, the automotive industry accounts for only six to ten percent of global capacity and is “only a small customer” from the point of view of the semiconductor manufacturers.

In addition, outdated chips are used due to the long development times.

"Currently used chips of a technology of 28 nanometers and larger for most applications in cars correspond to the status of an iPhone 4 from the years 2010-2013," wrote the industry experts.

It is not lucrative for semiconductor manufacturers to free up capacities for the automotive industry by switching to old technologies:

Chip shortage: Demand will exceed supply in 2024 as well

Even in the event of a contraction in demand for chips for mobile phones and game consoles, "chip production remains the bottleneck for the automotive industry," wrote industry experts at Alix.

Demand will still exceed supply in 2024, which in turn will contribute to rising prices for semiconductors and ultimately for vehicles.

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A problem with which the car manufacturers are already struggling.

Numerous manufacturers have already tightened the price of their electric cars in 2022, including Tesla.

Elon Musk even described the prices as "embarrassing".