Microprocessor shortage easing: report

CAPACITY is slowly returning to many of the world’s automotive production lines as the global semiconductor shortage finally shows signs of easing.

In a report published by Bloomberg, brands such as BMW, Daimler Truck Holding and Mercedes-Benz say they are cautiously optimistic that the supply of high-tech components is improving but will continue to monitor the situation on a week-by-week basis.

“We are still monitoring it week to week, but up to now, basically worldwide, we had no issues running production,” Mercedes-Benz head of production and supply chain management Joerg Burzer told Bloomberg.

“We have had supply issues occur here and there, but nothing compared to what it was like last year.”

The breakthrough comes earlier than expected. BMW, Volkswagen and other companies recently suggested that it may be another two years before production lines returned to capacity while others, including Citroen and Toyota, said the reduction in microprocessor supply had forced them to revise their production forecasts downward.

Bloomberg reports that in some cases, microprocessor supply has affected global passenger vehicle output so severely that production numbers are yet to return to pre-pandemic levels and that many manufacturers are still struggling to source sufficient components to meet the production requirements of increasingly computerised cars.

There are concerns that consumer demand may trail off due to accelerating inflation and higher interest rates. Lower demand for new vehicles across the globe, coupled with soaring raw material costs and growing backlogs, raises the likelihood that another production slump could grip the industry even as the microprocessor shortage eases. 

Tesla CEO Elon Musk said recently he had a “super bad feeling” about the state of the economy, yet across the Atlantic, the findings of an Ifo Institute survey showed European manufacturers were far more optimistic than their North American counterparts.

According to the survey, French, German and Italian manufactures have growing confidence in the state of the economy, but say price hikes are all but inevitable.

“It’s not perfect, but it’s better than last year,” said Daimler Truck Holding board of management member Karin Radstrom. “I try not to celebrate too early. We are still monitoring the situation closely.”

Ms Radstrom’s sentiment was echoed by that of a BMW Group spokesperson who told Bloomberg that, “currently, the situation is a little more stable”, but that fresh disruptions cannot be ruled out over the coming weeks and months.

A Volkswagen Group spokesperson told Bloomberg the Wolfsburg-based firm had “steady supplies”, but said there was still “significant uncertainty” about the months ahead.

Paccar’s DAF truck unit president, Harry Wolters, said much the same, saying, “we have seen better supply of components than we maybe anticipated five or six weeks ago. In the US and Europe, we have been able to increase build rates.”

But not all manufacturers share Mr Wolters’ relief.

Volvo Trucks said it was still experiencing limited chip availability and expected its second-quarter production to be affected accordingly. Mercedes-Benz CEO Ola Kallenius said his company would resort to using (more expensive) alternative suppliers to avoid production shortages, while Ford CEO Jim Farley said the Blue Oval would “source chips wherever it could in the open market” in a bid to maintain production numbers.