Mon, 10 May 2021

Auto semiconductor shortage expected to ease in late spring

Robert Besser
21 Apr 2021, 14:23 GMT+10

SHANGHAI, China: Auto industry executives remain anxious about the global shortage of semiconductors that is affecting production in the world's largest car market, China, which they hoped would lead the global recovery in the auto sector.

The shortages, caused by manufacturing delays attributed to a faster recovery than expected from the coronavirus pandemic, have forced automakers worldwide to adjust assembly lines.

China's biggest foreign automaker, Volkswagen, which hopes to sell over four million vehicles in the country, said the impact of the shortage remains unabated in the second quarter this year.

Stating that it was difficult to predict how much production Volkswagen might lose week-to-week or even month-to-month because of the chip shortage, Stephan Woellenstein, Volkswagen's China chief, told reporters on Sunday, "It's really like fire-fighting... In some cases, we have switched to another chip, so we changed suppliers," he said, ahead of the Shanghai auto show which opens on Monday.

Automakers, including Volkswagen and General Motors, had their hopes pinned on China, where over 25 million vehicles were sold last year, amidst the pandemic hitting the global auto industry hard.

However, China was also the first to report the news of the auto chip shortage last year, worsened by a fire in the Renesas Electronics chip factory in Japan in March.

In 2019, automotive groups accounted for roughly one-tenth of the $429 billion semiconductor market, according to McKinsey, with NXP Semiconductor, Germany's Infineon and Renesas, among key suppliers to the sector.

Automakers, including Nissan Motor, Ford Motor and Nio Inc said they cut production due to the chip supply shortage.

Revealing that the chip supply shortage hit auto production by 5 percent to 8 percent in the first two months of this year, Li Shaohua, senior official at the China Association of Automobile Manufacturers, expected the impact to ease beginning in the third quarter of this year.

As a result, the China Automobile Dealers Association said it expects car inventories to continue to drop in China as the chip shortage is affecting overall auto production. The supply of some car models might not be able to meet demand, it added.

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