Semiconductor crisis: latest updates as chip shortage cripples industry
Production shortages are still biting hard, with supply troubles expected well into 2022
After a difficult year where the automotive and technology industries have been hampered by production shortages, several manufacturers are still feeling the strain with some having to close production lines earlier than the originally planned.
The crisis looks likely to continue well into 2022 despite some, including Toyota, believing the worst was already over. Many firms have now moved to agree significant deals with large electronic manufacturers to ensure a consistent supply of semiconductors well into the future.
The shortage of semiconductors initially stemmed from increased demand for personal computers, tablets and smartphones at the height of the Covid-19 pandemic, which largely diverted supply away from the automotive sector, and now extends to Covid-related closures at semiconductor factories and international shipping ports.
Previously, Autocar reported that a number of manufacturers were urgently seeking to overhaul their components supply chains as a workaround to ensure continued production. Analysis company IHS Markit said at the time that the shortage could cut global production by nearly 700,000 vehicles year on year, although the final figure could be even higher.
The European Automobile Manufacturers Association (ACEA) says the global chip shortage has caused a loss of 3 million units compared to 2019. “For the sake of our industry’s global competitiveness, Europe must strengthen its technological sovereignty to be able to provide essential components to the region’s core industries,” said ACEA president Oliver Zipse.
*BMW*
BMW has signed a semiconductor supply deal with Inova Semiconductors and GlobalFoundries to secure a supply of “several million microchips per year.” The firm says the chips will be used for smart LED lighting technologies in the BMW iX and other upcoming cars.
“We are deepening our partnership with suppliers at key points in the supplier network and synchronising our capacity planning directly with semiconductor manufacturers and developers,” said Dr Andreas Wendt, BMW’s head of purchasing and supplier network.
“This improves planning reliability and transparency around the volumes needed for everyone involved and secures our needs for the long term,” Wendt said.
BMW CEO Oliver Zipse, who is also the president of the European Automobile Manufacturers' Association, warned earlier this year that supply problems would continue and that “the gravity of the situation requires a strong and coordinated response across the European Union.”
*Ford*
Ford has been heavily impacted by the shortages throughout 2021, but CEO Jim Farley has suggested the firm will prioritise batteries over semiconductors to meet the 200,000-strong demand of the electric F-150 pick-up.
Speaking to CNBC in the US, Farley said: “We’ll get the semiconductors, that’s a matter of prioritizing the (battery-electric vehicles) over the (internal combustion engine) vehicles… The issue is batteries. That’s what we have to solve.”
In November, the firm agreed a deal with GlobalFoundries to develop semiconductors to be used for Ford’s hands-free driver assist and battery management systems.
Previously, the firm halted production of the Fiesta from May to the middle of July and the firm’s Turkey-based factory, where the Transit is manufactured, was also closed over the summer. Some Ford models were also shipped with some missing features, including sat-nav, with retrofits expected.
“I think the issue will be around for a while – probably until Q1 next year,” Ford fleet director Neil Wilson told Fleet News. “It will ease, but there will be challenges going forward and we have to be good at reacting to those challenges.”
*Jaguar Land Rover*
JLR is still warning of long waiting times for its new models. The firm issued a warning to leasing companies that the lead time for 53 model variants extends to over a year, with 2022-model-year Land Rover Defender, Land Rover Discovery, Land Rover Discovery Sport, Range Rover Evoque and Jaguar E-Pace models all impacted, reported Fleet News.
“Like other automotive manufacturers, we are currently experiencing some Covid-19 supply chain disruption, including the global availability of semiconductors, which is having an impact on our production schedules. We continue to see strong customer demand for our range of vehicles,” JLR said in an earlier statement to Autocar.
“We are working closely with affected suppliers to resolve the issues and minimise the impact on customer orders wherever possible,” it added.
*Mercedes-Benz*
Mercedes-Benz’s Hungary plant has halted production for a month from Monday 13 December - earlier than the factory’s standard end-of-year maintenance period, reports Automotive News Europe.
"Adjusting to the continuously changing component supply situation, the Mercedes-Benz plant in Kecskemet will modify its production plans from calendar week 50,” Daimler said.
The factory is the largest industrial employer in the region and produced 160,000 cars last year. Production will resume from 12 January, and the 4700-strong workforce at the factory will continue to be paid a base salary with benefits. The factory currently builds the B-Class, CLA, CLA Shooting Brake and A Class.
The German firm previously reduced its optional equipment list on some models to minimise delays, Fleet News reported, “from late June production and until further notice.” Electronic options such as a foot-operated boot release, wireless mobile charging pads, audio devices and LED headlights will be removed on some models, impacting AMG-Line models most significantly.
“Regardless of the model, we take into account how long a customer has been waiting for their vehicle and try to prioritise accordingly,” it said. “Nevertheless, handovers to customers are strongly dependent on the individual equipment and the short-term availability of parts.”
*Nissan*
Nissan believes the automotive industry will be affected by shortages until mid-2022.
"The pandemic has really disrupted the supply chain around the world and (the) automotive industry has been impacted much more than expected,” said Ashwani Gupta, the firm’s chief operating officer. “It will take some more time to get back to normal operations," he said.
Nissan’s Sunderland plant has been feeling the impacts of the semiconductor shortage for six months, reported the Sunderland Echo.
“The global shortage of semiconductors has affected parts procurement in the auto sector,” a Nissan spokesperson said. "Due to the shortage, Nissan is adjusting production and taking necessary actions to ensure recovery.”
Renault, which owns Nissan, has also predicted that supply shortages will last until mid-2022. The firm’s CEO Luca De Meo has said it will prioritise output of higher margin vehicles.
"Renault has been forced in some cases to send someone to Asia to get the chips," said De Meo, describing the situation as "a mess."
*Stellantis*
Stellantis has signed a deal with Taiwanese firm Foxconn to design a new family of semiconductors to be implemented into the group’s four electric vehicle platforms. Foxconn will provide over 80% of Stellantis’ semiconductors.
“Our software-defined transformation will be powered by great partners across industries and expertise,” said Carlos Tavares, Stellantis CEO.
“With Foxconn, we aim to create four new families of chips that will cover over 80% of our semiconductor needs, helping to significantly modernize our components, reduce complexity, and simplify the supply chain,” Tavares said. “This will also boost our ability to innovate faster and build products and services at a rapid pace.”
The deal should see Stellantis’ growth continue. It became Europe’s best-selling manufacturer in November, overtaking Volkswagen Group for the first time since the French organisation’s inception. It claimed a 21.0% market share, thanks to the success of the Peugeot 2008 and 208.
The deal with Foxconn will also involve research into reducing the complexity of semiconductors, which Stellantis believes will be important as vehicles become “increasingly software-defined.”
*Toyota *
Toyota will continue to halt production at many of its Japanese factories as its component suppliers have been disrupted because of Covid-19.
Production of the Land Cruiser SUV as well as several Lexus models will be impacted, with 14,000 vehicles expected to be lost.
The stoppages were caused by a “lower attendance rate at suppliers in South East Asia due to the re-spread of Covid-19 and tight logistics situation in Japan,” Toyota said in a statement sent to the BBC.
Toyota will stay committed to its 9-million strong production target despite the shortages. It marks the fourth time the firm has cut production in 2022. Six of its 28 factories were shut down in November, while production was slashed in August due to Covid-19 and a fire at one of its major facilities.
"I think we are over the worst period," Toyota global procurement manager Kazunari Kumakura said back in November.
The firm hopes between 850,000 and 900,000 vehicles will be produced for worldwide distribution, which is a 15% cutback from Toyota’s targets to produce 1 million vehicles this November. Kumakura says Toyota would have hit the 1 million mark had supply issues not been as impactful.
"We are now coordinating both internally and externally with our suppliers to see how much we can make a recovery in December and beyond," Kumakura said. "We target a high production level for December and beyond, so we will try our best to make as many vehicles as possible."
*Volkswagen Group*
Production at Volkswagen’s Emden plant is on hold for the rest of the year because of a shortage of microchips and electronic components, reports Automobilwoche, sister publication to Automotive News Europe.
Output will resume on 10 January. Both the Volkswagen Passat and Arteon are built at Emden, with ID 4 production expected to begin at the facility next year.
The equivalent of 70 working days will have been lost by the end of the year due to short-time working, a VW spokesperson told Automobilwoche, with the cut in production described as “massive.”
Seat will also cut production and close its Barcelona plant for five days in December due to impacts caused by global supply disruption, Automotive News Europe reports.
"The crisis of global semiconductors supply, that affects all the automobile industry, will force us to idle the Martorell plant on 17, 20, 21, 22 and 23 December," Seat said in a statement.
The decision comes as demand for Seat and its Cupra performance brand have returned to pre-pandemic levels.
*Volvo*
Volvo has claimed its supply situation has improved with the announcement of its quarterly report last month.
While supply was still lower than pre-pandemic levels, the Swedish manufacturer said production had “improved month by month” since September.
Speaking about the firm’s third quarter results, Volvo CEO Hakan Samuelsson said: “Production was approximately 50,000 cars lower in the quarter compared to the same period in 2020, while sales in the period fell by approximately 30,000 cars as the drop in production volumes was compensated by lowered inventory,”
"The supply situation has improved going into the fourth quarter, but we expect the industry wide shortage of semiconductors to remain a restraining factor,” said Samuelsson.
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