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Microchip Shortages Are Expected to Ease in 2023, but It's for the Wrong Reasons

The chip shortage affecting the auto industry has been a good-news, bad-news game for the past year, and it will continue to be so in 2023. According to industry analysts, the chip crunch will ease next year, although this might not be the good news everyone expects.
Microchip shortages are expected to ease in 2023 7 photos
Photo: Intel
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As the world woke up from the lockdowns during the pandemic, it faced a shortage of semiconductors. The auto industry was among the hardest hit by this crisis, as more technologically advanced sectors took the lion’s share of microchip production. It happened because carmakers idled factories at the same time when consumer electronics sales exploded, prompting the chip industry to shift focus. It’s a little more complicated because the carmakers also use less advanced chips in their vehicles while the rest of the tech sector has moved on.

We’ve seen mixed signals that the car industry will finally surpass supply-chain woes next year, including the electronic components shortages. This is bound to happen since the trend that started the chip crunch is seeing a reversal. As the auto industry pressed the accelerator pedal, the consumer electronics manufacturers slammed the brakes, so a new shift is expected that would benefit carmakers and their customers.

This has led analysts to predict that the chip supply for the automotive industry will improve next year. According to AutoForecast Solutions, microchip shortages will cause fewer than 3 million vehicles to be cut out of carmakers’ production schedules in 2023. The figure marks a significant improvement from this year, when 4.55 million vehicles were axed from automakers’ production schedules, following 10.5 million units of lost production in 2021.

This improved outlook is confirmed by other industry sources, which see increased investments in microchip production capacity as a contributing factor. China especially is putting in place a very aggressive plan to accelerate electronics components production. But there’s also another contributing factor that makes this news a less pleasant one.

According to Automotive News, analysts see strong signs indicating that a recession might hit in 2023. Such a development would diminish demand for new vehicles, with carmakers expected to cut down production. The move will alleviate the chip constraints, with the cuts likely to shadow production losses caused by component shortages.
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About the author: Cristian Agatie
Cristian Agatie profile photo

After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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