Carmakers Hit Hard by Chip Shortage And Suspending Production Is the Only Option

The chip shortage hitting the automotive industry doesn’t seem to come to an end, and more carmakers are now impacted, with a temporary halt of the production at certain facilities becoming the only solution some can turn to.
Foundries already working at 100 percent capacity 1 photo
Photo: InvestorPlace
Renault and Stellantis have both decided to suspend the production of new cars due to the lack of semiconductors used for engine management and certain electronic systems, according to a recent report, with operations to resume later this month.

Renault will halt the car manufacturing at one factory in France and two more in Morocco and Romania, though the company says this is a temporary solution that would only be used “for several days.

Stellantis has also decided to suspend the production at its Eisenach factory in Germany and the Zaragoza plant in Spain.

Several other carmakers, including Volkswagen, Toyota, and Ford have been struggling to deal with the chip shortage in the last months, though until now, the impact on their output is believed to be minimal despite the temporary suspension of the production.

What’s causing the chip shortage?

The shortage of essential semiconductors used by automotive companies for critical electronic systems installed on their cars is the result of the global health issue that has caused the demand for other devices, such as laptops and tablets, to skyrocket throughout 2020.

With the world entering a massive lockdown and plenty of people moving to remote working, sales of productivity devices took off last year, eventually hitting the manufacturing capacity of the biggest foundries, most of them located in Asia.

With not enough chip capacity to meet the demand, the automotive industry has been hit the hardest, despite promises from large companies, such as TSMC, to boost the production and ship more orders to carmakers across the globe.

TSMC, which is Apple’s biggest partner for the manufacturing of the iPhone and other key products, confirmed earlier this year that its chip capacity was already at 100 percent, but it was making efforts to ship orders to the automotive industry too.

The chip shortage is eventually expected to hit other sectors too, and South Korean tech giant Samsung has warned that at one point, the smartphone business could also be hit, especially because the largest foundries in the world are continuously redirecting orders. Samsung is concerned the release of new phones would be pushed back, as foundries would eventually prioritize other industry sectors.

At this point, nobody knows for sure when the chip crisis is supposed to come to an end, but some estimate the production would finally align with the global demand in the summer, when the sales of some electronics, such as smartphones and tablets, typically decline.
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About the author: Bogdan Popa
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Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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