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Bosch Plans to Spend $3B to Flood the Market With Microchips, but It Will Take Time

The auto industry grapples with a severe microchip shortage that forced multiple assembly plants to stop operations. This has led to a long waiting time for customers buying a new vehicle. Bosch vowed to end this situation with a $3 billion investment in microchip production.
Bosch plans to spend $3B to flood the market with microchips 6 photos
Cleanroom in Bosch factory in GermanyBosch facility in Reutlingen, GermanyBosch facility in Reutlingen, GermanyBosch facility in Reutlingen, GermanyBosch factory in Dresden, Germany
Electronic component shortages are the number one cause of lost production for carmakers. The auto industry has to compete for the scarce microchips with the consumer electronics companies, and sometimes carmakers end up with the shorter stick. Over the past 18 months, carmakers were forced to cancel 13 million vehicles from production schedules, according to AutoForecast Solutions.

The situation is slowly improving, as revealed in a recent Susquehanna Financial Group study, but more needs to be done. More semiconductor production facilities pumping out chips should provide the necessary relief, and Bosch is determined to help with that. The world’s largest supplier plans to invest more than $3 billion to expand its semiconductor business by 2026.

The investment will help open new testing centers, research facilities, and a new chip-production capacity in Germany. This sounds like an aggressive plan to combat the chip shortage, but it’s too early to pop the champagne. That’s because the massive investment will only start to pay off toward the end of the decade.

Also, Bosch’s business is vast; only a fraction of the new chips flooding the market will go to the automotive sector. Besides the burgeoning car parts business, Bosch also produces a wide range of electronics, from coffee makers to home security systems and industrial appliances. They will need all the chips they can get to feed this monster as more and more products will require sophisticated electronic components in the future.

Bosch has invested in making its own chips before. The German giant opened a new semiconductor wafer production facility in Dresden a year ago. At $1 billion, this was the largest single investment in the company’s history. Bosch’s automotive business accounted for $49 billion in worldwide sales in 2021, according to Automotive News.

 
 
 
 
 

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