Chip shortages to take ‘years’ to resolve

SEMICONDUCTOR shortages are continuing to plague the automotive industry on both sides of the Altantic Ocean some three years since the issue first came to light.

According to Audi head of procurement, Renate Vachenauer, the bottlenecks caused by ongoing chip shortages in the German car industry in particular may take ‘years’ to resolve, while union action in the United States may throw microprocessor supply into turmoil.

Ms Vachenauer said Germany’s manufacturing base has been hit hard by manufacturing delays attributed to a global shortfall of microprocessor supply.

Speaking to German newpaper Augsburger Allgemeine, she said part of the issue lies in the variety of chips used throughout the industry, saying that as many as 8000 different types are in use in vehicles today.

“It takes years. After all, it is about billions of dollars that are being invested,” she said.

“We have to use many levers to stablise the supply of semiconductors and also stock-up on the broker market to some extent.”

Ms Vachenauer said German auto industry executives and policy makers are re-thinking supply lines with the aim of reducing reliance on what she says is a handful of Asian and US microprocessor suppliers.

Germany is offering subsidies to international companies to manufacture their chips in the country, with USA’s Intel and Taiwan’s TSM set to build factories in Germany over the coming 12 months.

But it is not expected the localisation of microprocessor manufacturing will do much to decrease the price of the valuable components.

Irish-American automotive technology giant Aptiv said it does not expect semiconductor prices to ease in the near future, saying prices of certain components are keeping prices high.

Speaking to Reuters this week, Aptiv said the “real challenge” is in obtaining chips, whose prices have risen 25 to 30 per cent, while supply chains remain “tight”.

It said demand for new vehicles remains strong in North America and Europe, but flagged concerns around underlying CDP growth in China.

Aptiv, which counts Ford and General Motors among its customers, also said it is positioned to have sufficient inventory to combat possible disruptions in case of a strike at the two Detroit automakers by the autoworkers’ union.

“We have the flexibility to adjust down and then back up if there is a labour disruption,” said Aptiv CEO Kevin Clark.

The UAW (United Auto Workers) is seeking improved benefits, including double-digit pay rises (46 per cent over four years) and defined-benefit pensions, for all workers in its talks with manufacturers Ford, General Motors and Stellantis.

Estimates have placed the costs for wages and benefits at more than $US100 ($A153.81) per hour per employee.