Connect with us


Automakers wake up to new pecking order as chip crackle intensifies




Automakers such as Volkswagen, Ford and General Motors cut production as the chip market was swept away by manufacturers of consumer electronics such as smartphones – the chip industry’s preferred customers because they were buying more advanced and higher margin chips.

(Subscribe to our Today’s Cache newsletter for a quick rundown of the 5 best tech stories. Click here to subscribe for free.)

The semiconductor crisis that has hit the auto industry leaves automakers with a difficult choice: pay, stock, or risk being left on the sidelines as chipmakers focus on more lucrative businesses elsewhere.

Automakers such as Volkswagen, Ford and General Motors cut production as the chip market was swept away by manufacturers of consumer electronics such as smartphones – the chip industry’s preferred customers because they were buying more advanced and higher margin chips.

The semiconductor shortage – over $ 800 worth of silicon is packed into a modern electric vehicle – has exposed the mismatch between an auto industry spoiled by decades of just-in-time deliveries and an electronics industry supply chain that ‘she can no longer bow to his will.

“The automotive industry has grown accustomed to the whole supply chain being car-centric,” said McKinsey partner Ondrej Burkacky. “What has been overlooked is that semiconductor manufacturers actually have an alternative.”

Read also | White House strives to address semiconductor shortage plaguing auto production

Automakers are responding to the shortage by pressuring governments to subsidize building more chip-making capacity.

In Germany, Volkswagen has pointed the finger at suppliers, saying it warned them in a timely manner last April – when much of global car production was at idle due to the coronavirus pandemic – that it she expected demand to pick up sharply in the second half of the year.

This complaint from the world’s No. 2 automaker is little ice-cream to chipmakers, who say the auto industry is both quick to cancel orders in a slump and to demand investment in new production in a recovery.

Read also | Volkswagen seeks damages from suppliers for chip shortage

“Last year we had to lay off staff and bear the cost of unused capacity,” said a source at a European semiconductor manufacturer, who spoke on condition of anonymity.

“If the automakers ask us to invest in new capacity, can they tell us who will pay for this idle capacity in the next downturn?”


The auto industry spends around $ 40 billion a year on chips, or about a tenth of the global market. In comparison, Apple spends more on chips just to make iPhones, says Mirabaud technology analyst Neil Campling.

Read also | Global chip shortage threatens laptop and smartphone production

Additionally, chips used in cars tend to be commodities like microcontrollers made under contract to older foundries – hardly the cutting edge production technology that chipmakers would be willing to invest in.

“The suppliers say, ‘If we keep producing this product, there is nowhere to go. Sony is not going to use it for a Playstation 5 or Apple for its next iPhone, ”said Asif Anwar of Strategy Analytics.

Chipmakers were surprised by the panicked reaction from the German auto industry, which persuaded Economics Minister Peter Altmaier to write a letter to his Taiwanese counterpart in January asking its semiconductor makers to provide more chips.

No additional supplies were forthcoming, a German industry source joking that the Americans had a better chance of getting more chips from Taiwan, as they could at least park an aircraft carrier offshore – referring to the ability of the United States to project its power in Asia.

Read also | Asian chipmakers rush to ramp up production to deal with global shortage

Closer to home, a source from another European chipmaker expressed disbelief at one automaker’s misunderstanding of how it works.

“We got a call from an automaker who was desperately running out of supplies. They said, ‘Why not do some night shift work to increase production?’ said this person.

“What they didn’t understand is that we’ve been running a night shift from the start.”


While Infineon, the leading supplier of chips to the global automotive industry, and Robert Bosch, the leading supplier of “Tier 1” parts, both plan to put new chip factories into service this year, there are supply shortages are unlikely to abate soon.

Read also | Bosch says pandemic and chip shortage will weigh on automakers in 2021

Specialty chipmakers like Infineon outsource some of the automotive chip production to subcontractors led by Taiwan Semiconductor Manufacturing Co Ltd (TSMC), but Asian foundries are currently prioritizing high-end electronics manufacturers. because they face capacity constraints.

In the longer term, the relationship between chipmakers and the auto industry will grow closer as electric vehicles become more widely adopted and features like assisted and autonomous driving develop, requiring more advanced chips.

But, in the short term, there is no silver bullet to the chip supply shortage: IHS Markit estimates that the time it takes to deliver a microcontroller has doubled to 26 weeks, and shortages will only bottom out until they reach 26 weeks. ‘in March.

Read also | Chip Crunch Will Impact Global Auto Production In Q3, Says IHS

This puts the production of a million light vehicles in the first quarter at risk, says IHS Markit. European chip industry executives and analysts agree that supply will not catch up with demand until later in the year.

Chip shortages are having a “snowball effect” as automakers slow down some ability to prioritize building profitable models, said Strategy Analytics’ Anwar, who predicts a decline in auto production in Europe and North America from 5% to 10% in 2021.

The boss of Franco-Italian chipmaker STMicroelectronics, Jean-Marc Chery, predicts that capacity constraints will affect automakers until the middle of the year.

“Until the end of the second quarter, the industry will have to manage at lean inventory levels,” Chery said at a recent Goldman Sachs conference.

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos

picture credit


to request, modification Contact us at Here or [email protected]