When the Chips Are Down, Step Up

Gartner 23 Feb 2021 04:00

Automotive manufacturers, like their high-tech compatriots, are dealing with a serious shortage of semiconductors that is set to last into the second half of this year — and possibly beyond. But instead of just a short-term reaction, this disruption needs to spur a longer-term and more collaborative response within the industry.

The impact of the crisis is significant. Leading OEMs such as Toyota, Ford, Volkswagen and Honda have been forced to halt production temporarily at several plants around the world. Lead times for some chips have tripled to as much as 40 weeks. And prices have risen by up to 15%. Forecasters reckon that output of more than 1.3 million vehicles could be lost in 2021 as a direct result.

Several factors explain the shortage of chips, which control everything from engines and driver safety systems to big-screen infotainment. They include:

  • Reduced production by automotive chip makers last year as a result of COVID-19 induced shutdowns and a slump in demand for new cars and trucks.

The hierarchical and adversarial history of the auto industry sits uncomfortably with the need to nurture an expanded ecosystem for semiconductors, as well as other key components such as batteries that will power the next generation of products.

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