William Malcolm

Semiconductor Chip Shortage Could Extend Through 2022

The drop in semiconductor supplies, which hit car manufacturers throughout Europe, will peak at the end of this year, and the situation should level out next year. This is expected by experts and bosses of some supplier companies, who spoke today at the Brno conference on the future of the automotive industry. Companies will strive for changes in supply chains, they will prefer suppliers who are closer to them.

“For this year, the decline in the European Union and the Czech Republic will be mainly at the end of the year. Next year, I expect, as well as the carmakers I had the opportunity to watch, that the situation should level off,” Tomáš Kozelský from the Economic and Strategic Analysis Department told ČTK. Czech Savings Banks.

Michal Nosek, Chairman of the Board of Directors of the Kroměříž company Plastika, expects the same development. “We expect the consolidation of the chain in the middle of 2022. Our sales are 85 percent automotive, about a third of sales come from Škoda Auto. We have to deal with the situation flexibly, because we learn about outages from day to day,” said Nosek. The company uses a number of different tools to deal with the consequences of the outage of one of the largest customers.

The current situation has its roots in last year’s pandemic year, when the worldwide demand for electronics increased. People in lockdowns began buying electronics on a large scale, and microchip factories were unable to meet demand. Along with the decline in production in car manufacturers, the automotive industry got on the second track with chip manufacturers, manufacturers preferred deliveries to electronics manufacturers.

But outages do not affect all car manufacturers in the same way. While Škoda Auto cut production at the end of June and again from Monday, Toyota has been building up microchip stocks since 2011. The Hyundai car plant in Nošovice also operates without production restrictions, as its representative Petr Michník stated today. “The plan from the beginning of this year for this year included production growth of 15 percent, so far we are holding it, we did not have to cancel a single shift. But the situation is very tense, demand is very high and we could produce much more,” said Michník.

Experts agree that experience with the current situation will lead carmakers to rethink their supply chains. “I believe that for some companies it will be an impulse to think in the context of strengthening Europe’s strategic self-sufficiency so that we are not dependent on supplies from other countries,” said Ludek Niedermayer MEP (TOP 09), who joined the conference remotely from Brussels. Tomáš Kozelský also expects a departure from market globalization. “The manufacturers will probably try to have more control over who supplies me, how quickly and whether they anticipate my demand even six months in advance,” Kozelský said.

Many companies in this industry use a just-in-time system. This means that components are ordered from suppliers so that the delivery time roughly coincides with the assembly time of the vehicle. The carmaker thus has chips and other components available when it really needs them, so it does not have to rent large and often expensive warehouses.