Semiconductor shortages hurt first-half automotive output: Oxford Economics

Persisting global semiconductor shortages will further hurt the global automotive industry and could disrupt the output of millions of cars, according to Oxford Economics.

“The list of major global industrial players reporting shortages is growing every day and its impact on production is becoming visible,” the agency observes. “According to our estimates, due to this factor, the total world car production in the first half of the year may decrease by two million units.”

At the moment, chipmakers expect a complete solution to the problem no earlier than 2022, although it was previously thought that tech companies would be able to solve supply problems by end-2021, it adds.

The situation was further exacerbated by snowstorms in Texas, as large chip manufacturers located there had to stop or reduce their production, and by a fire at Japanese semiconductor producer Renesas.

This affected a number of global carmakers in Japan, the US and Europe, given Renesas is the second-largest producer globally of car microcontroller unit chips. The shortage is also disrupting automotive production in Russia.

In general, Oxford Economics does not view the shortage of chips as a serious problem for the global economy. Rather, it is largely the result of high demand, reflecting the active state of the industrial sector.

Carmakers are now not only resorting to cutting production, but also simplifying components to use a minimum of chips, it adds.

Earlier, German carmaker Volkswagen predicted more disruptions at its production sites. Technology company Intel meanwhile said it expects it will take a couple of years to make the significant investments to meet the growing global chip demand (see Kallanish passim).

Svetoslav Abrossimov Bulgaria