This post was last edited by at 2021-01-11

According to Japanese media observation, semiconductor supply shortage leads to global electric vehicle production into chaos.


Semiconductor, an essential part of car production, is facing a growing shortage, the Nikkei newspaper reported on January 9. Semiconductor is an integral part of the automotive electrification process, but the massive demand for semiconductors in the smartphone industry has left the semiconductor manufacturing industry with no inventory to transfer to the automotive industry. Nissan Motor Co. 's decision to cut production follows that of Germany's Volkswagen and Japan's Honda. Toyota Motor Corp. is also unable to determine production plans for 2021, so it can be said that the semiconductor supply shortage has spread to the global impact.


The VW group has already announced changes to production in China, North America and Europe, citing a shortage of semiconductors. In Germany, the flagship Golf will be discontinued from December 2020 to mid-January 2021. Seat, part of the Volkswagen Group, will cut production in Spain from late January to April. Honda also decided to adjust its production schedule, reducing the number of small cars made by Suzuka by about 4,000 in January.

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According to the report, the reasons for the production cuts are mainly due to delays in the supply of parts with semiconductors by Germany's Bosch AG and Continental Group. The semiconductors were sourced from NXP Semiconductors of the Netherlands and STMicro of Switzerland, but it appears some of them have been delayed.


With the popularity of pure electric vehicles and autonomous driving technology, the importance of on-board semiconductors has increased. According to KPMG Japan, the average battery-electric car uses twice as many semiconductors as a petrol-powered car. Carmakers now need a lot of semiconductors because of the surge in demand following the outbreak of the new crown. But purchases of semiconductors for computers and smartphones are also on the rise, driven by the demands of living at home. The semiconductor industry has received a large number of orders for different specifications of semiconductors in many industries, which seems to be a bit beyond what it can do.


A big reason for the sluggish supply of semiconductors, according to the report, is the industry's push into so-called "horizontal division of Labour", which separates research and development from production. Semiconductor companies often do not their own production, but to semiconductor contract manufacturers order. In order to produce a wide variety of semiconductors, it takes time to adjust equipment and so on, so it is difficult for a contract manufacturer to manufacture different semiconductors simultaneously. It may be half a year before some car companies get a regular supply of semiconductors.


Most car production was halted in the first half of 2020 due to the outbreak of the new crown, the report said. Another reason is that the car industry has not been able to compete for the high-tech industries such as smartphones and cell towers that have expanded their business during this period. Semiconductor, which has become increasingly important in vehicle upgrades, is facing production bottlenecks, which can be said to be a new issue for the industry.

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