Buoyant microchip outlook fails to eventuate

CONFIDENT assertions late last year from many automotive quarters on the improving availability of semiconductors (microchips) appear to be far from reality.

A new report published by Automotive News this week, predicts manufacturers will suffer a loss in production this year of more than two-million vehicles globally as a result of semiconductor shortages.

As recently as last December, the general feeling being expressed by parts of the automotive sector was one of anticipation for new or expanded semiconductor factories that would come on stream that would alleviate shortages. This was coupled with the effects of a global economic slowdown and fears of rampant inflation softening micro-chip demand.

There were also suggestions that a “chip glut” would see more microprocessors produced than was required.

Production increases were underpinned by government incentives in some countries including the United States.

VNC Automotive, an in-vehicle connectivity software and hardware producer (and semiconductor consumer) exemplifies the then positive outlook going on record at the time asserting there will soon be a sudden chip over-supply as a result of numerous new factories and slackening demand.

“It’s ironic that the very situation that triggered the shortage for much of the automotive industry should be driving the recovery, now that it has become reversed due to the prospect of recession,” said VNC Automotive CEO, Tom Blackie.

“In fact, such has been the speed of the shift to oversupply that we are regularly approached by chip suppliers asking if we’d like to increase our orders.”

VNC Automotive pointed to a looming global recession coupled with a cost-of-living crisis that is beginning to bite causing consumers to quickly rein in their spending.

They weren’t alone on that score.

However, Automotive News says semiconductors remain in short supply directly affecting car production to the tune of 90,000 vehicles cut from volume plans in Asia, North America, and Europe last week alone.

Prospects down the track aren’t looking much better.

The report says, “the number of vehicles cut from automakers’ production schedules this year to date because of semiconductor shortages topped one million last week. New losses mounted in Asia and North America, according to the latest estimate by AutoForecast Solutions”.

It has monitored the impact of the global semiconductor shortage since the start more than two years ago. Statistics show lost vehicle production worldwide so far this year is about 1.07 million which is expected to grow 2.83 million by the end of the year.

Hardest hit last month were Asian assembly plants where some 27,100 vehicles were axed from the production schedule in China, and 28,900 units from other Asian factories outside China.

North America lost 25,600 and 10,800 units were lost in Europe.

On a year-to-date basis, the US is by far the hardest hit losing 563,900 units due to semiconductor shortages and expected to top out by the end of the year at 1,144,600 units.

Europe is currently down 228,300 year-to-date and is expected to end the year down by 700,000 units or more.

China’s related figures are 209,500 so far growing to 285,100 by year’s end while the rest of Asia is tracking at 57,400 so far but expecting a jump to 553,100 lost by the end of the year.

Other auto making areas such as South America and Middle East/Africa fare little better.