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Carmakers Caught Short Due to Lack of Chips

Carmakers Caught Short Due to Lack of Chips
06 May 2021

There is a severe shortage of semiconductors which is causing massive issues with the production of motor vehicles.

The global chip shortage is set to create a power struggle between chip manufacturers and their customers about how the industry's supply chain works.

Jean-Marc Chery, chief executive of STMicroelectronics, said that carmakers and car part suppliers will have to hold more inventory to make supply more predictable and reduce the risk of further shortages.

Infineon, Europe's biggest chipmakker, gave a similar warning that car companies need a different model for procuring chips as demand greatly exceeds supply for the majority of applications.

The shortage of chips has been caused by a rebound in demand for cars, which coincided with a booming consumer electronics market due to COVID-19.

Carmarkers around the globe have been caught short, meaning production has been idle or rearranged and this resulted in 1.3 millions less cars produced in Q1.

Ford CEO, Jim Farley, told investors that the chip shortage had prompted the company to rethink how it would guarantee supplies of important components in the future.

What does this mean for our customers?

Lead times are continuing to extend across the industry, so if you have a car that is due to be returned before the end of the year please get in touch as soon as possible to see how we can help.

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