Leading Chipmaker Says Car Companies Won't Be Favored Over Smartphone Brands

The chip shortage is far from coming to an end, and large carmakers out there are still struggling with the whole thing, sometimes suspending the production of certain models until their suppliers are finally able to ship the orders.
Infineon says carmakers need to build inventory as well 5 photos
Photo: Infineon
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Partially caused by the global health issue, which increased the demand for electronics amid more people working remotely, the chip shortage is the living proof carmakers are doing the whole thing wrong, as most of them still rely on instant shipments from suppliers.

This is what Infineon, one of the leading semiconductor companies in Europe, explained in a recent interview, adding that carmakers must change their strategy and take the risk of holding inventory.

In other words, they can no longer rely on instant purchases from chip suppliers but actually order more components in advance and then create an inventory that would guarantee uninterrupted production.

The auto industry cannot say: ‘OK fine, we don’t need [any more chips], and then come back later and say: ‘Now we need them’,” chief executive Reinhard Ploss was quoted as saying by the Financial Times. “They have to consider the long lead times [in the semiconductor sector] of about half a year.

Several carmakers, such as Volkswagen, Toyota, Ford, and Stellantis, turned to production halts in an attempt to deal with the lack of chips. And Infineon says it’s all because suppliers are always the ones taking the risk of holding inventory, in which case the larger clients are getting most of the orders.

Ploss warns carmakers won’t be favored over smartphone makers, which typically order a higher number of chips given their global sales. Research firm IDC estimates phone sales got close to 1.3 billion units in 2020, a decline of 5.9 percent compared to the year before, with Samsung and Apple accounting for over 470 million of all devices.

For them not to deliver a car because of a two dollar device is a no-go. We as supplier are doing everything we can to avoid such a situation for our customers,” the Infineon executive concluded.
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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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