Brussels (Brussels Morning) The shortage of microchips is becoming a growing problem for companies from a wide range of industries and the end to the blockage is not in sight.
Cars, smartphones, household appliances – the delivery bottlenecks in semiconductors affect many companies and cause production stops and delivery delays. The semiconductor industry has been producing at full speed for months, but the demand for various semiconductors has not stopped.
In the auto industry alone, two to four million cars could not be built in the first half of 2021 because of the lack of microchips. There is mainly a scarcity of electronic components such as oscillators, microcontrollers and power chips. Because of the shortage, manufacturers such as Volkswagen, Ford, Nissan and Honda have had to stop their lines repeatedly since the beginning of the year.
Caught Cold by the High Demand Caused by the Pandemic
The fact that automakers are particularly hard hit by the semiconductor bottlenecks is primarily due to the exponentially increased demand during the ongoing pandemic. Many companies had reduced their production under the impression of declining orders. However, the demand for cars came back faster than expected. Meanwhile, chip manufacturers have switched their production to chips for computers and smartphones, which had already experienced high demand at the beginning of the pandemic.
The shortage of chips does not only affect microcontrollers but is also noticeable in electronic and household appliances. In consumer electronics, display driver chips are currently in great demand.
The Reason? Countless Customers, Few Manufacturers & Natural Disasters
The semiconductor industry concentrates on a manageable number of suppliers. Around two-thirds of the global production capacities for the manufacture of chips and processors are located abroad. This is because although many semiconductor manufacturers around the world develop the chips under their label, they are actually produced in the so-called ‘foundries’ in different parts of the world.
The largest of these is TSMC from Taiwan, which produces three-quarters of its semiconductors for American chip manufacturers. TSMC expects the situation in the auto industry to ease in the coming months.
Unexpected production stops at other chip manufacturers in the first quarter made the situation even worse. In February, an earthquake caused a two-day production stop at Renesas Electronics, Japan’s largest manufacturer of car chips. In March, production had to be temporarily suspended after a fire.
Investments in More Production Capacities
To smooth things over, many semiconductor manufacturers announced that they would further expand their production capacities. The new production lines are likely to focus primarily on more advanced and often thinner chips, which will be faster to manufacture and will require less raw materials.
At the same time, the construction of new production sites is currently facing some difficulties too as the required production machines cannot be produced in sufficient quantities at the moment – partly because there are no chips for the operating systems.