Chip Shortage Affects Auto Industry

Auto industry is in for a wild ride in 2021 as chip shortages are not projected to correct itself anytime soon.

The auto industry had a rough year in 2020 with the global pandemic and consumer demand at a lull. It appears they will face a new challenge in 2021, acquiring components. According to EETimes article “Auto Industry Chip Shortages Reflect Wider Shortfall” this year the chip supply chain may not make a full recovery.

Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) are two of the top three foundries and they have disclosed they are at full production. Consumer electronics companies like Qualcomm and Apple have standing orders that have been prioritized. Both companies have acknowledged the shortage issue and have agreed to work closely with automakers to reallocate production to meet demand. Will this be enough?

Many global influences have exacerbated the current shortage including the demand for 5G, phone production, PC demand, and peripherals. This increase has put a large demand on the foundry. New foundry capacity takes a long time to come online.  These shortages worsened after the US imposed restrictions on Chinese chip makers. At this time there seems to be no quick fix.

Both TSMC and UMC have increased their capital expenditure budgets for 2021 to deal with this crisis. Neither of them expect this spending to impact the shortage until mid-year. Even then the damage has already been done.

Read the full article here.

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