Car production could slow down due to chip shortage

Car production could slow down due to chip shortage

Covid-19 may have slowed down automotive production earlier this year, but the industry has been picking up in recent times as sales of new cars has swelled, fuelled by consumers looking to travel in private vehicles instead of taking public transport. This is very much the case in China, but now, the automotive sector is signalling that production in the country may soon be unable to keep up with demand, and all because of a shortage of electronic chips.

The industry has signalled that a shortage of chips used in auto manufacturing could disrupt automotive production in China well into 2021, Reuters reports. Microprocessor and integrated circuit electronics have become an integral part of a modern car, handling everything from the management of engines to a slew of driver-assistance features such as automated emergency braking these days. The problem is, they come mostly from Europe, and the pandemic has dramatically affected supply.

German automotive component suppliers Continental and Bosch warned about the shortage of semiconductor components, and the message was echoed by carmaker Volkswagen. While production is being increased in response, levelling up that supply will take time.

Car production could slow down due to chip shortage

Production line of the new factory.

“Although semiconductor manufacturers have already responded to the unexpected demand with capacity expansions, the required additional volumes will only be available in six to nine months. Therefore, the potential delivery bottlenecks may last into 2021,” Continental said last week.

Bosch said it too was seeing supply chain bottlenecks for certain components. “No supplier can elude this market development. We are in close contact with our suppliers and customers to maintain the supply chains as much as possible despite the tense market situation,” the company said.

Other chip suppliers indicated that a price hike was inevitable due to the shortage. In a letter to customers that was sighted by the news agency, Dutch automotive chip supplier NXP Semiconductors said it would have to raise prices on all products because it is facing a “significant increase” in the cost of materials as well as a “severe shortage” of chips. “To address the unforeseen increase in costs from our suppliers, we reluctantly must raise pricing on all products,” it said in the communications.

Car production could slow down due to chip shortage

With vehicle production virtually dependent on automotive chips, automakers can only build cars if stocks of these are present. Volkswagen, the largest foreign automaker in China, said that it was closely monitoring the situation, but added that the country’s overall auto production could be interrupted as a result of the shortage.

“The chip supply for certain automotive electronic components has been affected due to uncertainties caused by the pandemic. This has led to a potential interruption in automotive production, with the situation getting more critical as demand has risen due to the full-speed recovery of the Chinese market,” a Volkswagen representative told Reuters via an emailed statement, referring to auto production for the country on the whole.

An industry source told the news agency that he expects that the shortage of electronic chips will impact China’s car production for a while, with automakers facing production interruptions in the short-term, but at different levels.

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Anthony Lim

Anthony Lim believes that nothing is better than a good smoke and a car with character, with good handling aspects being top of the prize heap. Having spent more than a decade and a half with an English tabloid daily never being able to grasp the meaning of brevity or being succinct, he wags his tail furiously at the idea of waffling - in greater detail - about cars and all their intrinsic peculiarities here.



  • azrai on Dec 07, 2020 at 2:05 pm

    Thank god to whoever use Toyota KE30.

    Like or Dislike: Thumb up 3 Thumb down 2
  • The Swede on Dec 07, 2020 at 2:39 pm

    Ahh now we know why Proton could not ramp up their X50 production…. too much tech in this car.

    Like or Dislike: Thumb up 4 Thumb down 4
    • pengayuhbasikal on Dec 07, 2020 at 3:27 pm

      Deswai jaga2 klu nak beli Proton X50…. pikiaq 7-8 kali, jgn nanti pening kepala..konon kereta baru dok tersadai kat SC… mekanik xtau repair.

      Like or Dislike: Thumb up 7 Thumb down 5
      • Engineer on Dec 08, 2020 at 8:55 am

        So base on your logic we shouldn’t use cars we should just stick to using manual 1 speed bicycles. Very smart. Oh BTW how did you connect to the internet using your abacus?

        Like or Dislike: Thumb up 5 Thumb down 2
      • Jalankaki on Dec 09, 2020 at 2:52 pm

        Tersadai kat tepi jalan sbb fuel pump pulak, mcm mana tu? Sbb patut recall tapi buat mcm tak ada hal pulak…

        Like or Dislike: Thumb up 1 Thumb down 1

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