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.