Semiconductor crisis

Semiconductor crisis: chip shortage will cost automakers billions

Several studies by specialized analysts suggest that the global shortage of semiconductors will have million-dollar consequences for car brands and, therefore, the price of vehicles will be increased.

New cars can include more than 100 microprocessors and manufacturers today cannot always get hold of them. Among the reasons, in addition to problems with raw materials and transportation , we find that the main producers are still trying to recover from the effects of the global pandemic.

Major semiconductor producers could increase their prices

At the same time, they have to supply the different sectors that use this type of semiconductor in addition to the automotive industry (telephony, computing and a long etcetera).

In the midst of the pandemic, while the demand for personal computers or leisure items that also use these types of elements increased, car sales fell worldwide and the main factories stopped or considerably reduced their production.

But starting in the third quarter of last year, activity in the automotive sector worldwide began to recover faster than expected and ran into the first delays in supplies, which have been accumulating until today. Demand for consumer electronics, meanwhile, has also continued to rise.

With existing foundries operating at full capacity, manufacturing more is not a simple matter as it takes 18 to 24 months to open a semiconductor plant after starting construction, in addition to the time it takes to adjust production.

TSMC and Samsung , which are among the top chipmakers, have already invested billions to accelerate a highly complex new 5-nanometer chip manufacturing process to power the latest cutting-edge products. This will predictably increase their prices.

In this sense, S&P Global Ratings points out that the lack of components and the increase in the price of some raw materials has caused an increase in the value of new cars, as well as an increase in the residual value of used models.

Carmakers could lose up to $ 92 billion

The accounts of the automobile companies will suffer a strong shake that according to a recent report by AlixPartners , will be around 92,024 million euros this year and will bring about a reduction in world production by 3.9 million vehicles .

For its part, the consulting firm Bain & Company is somewhat more optimistic and estimates that the losses due to the shortage of semiconductors will be about 50,205 million euros . In any case, the losses will be considerable and the prospects for improvement are not very encouraging .

If at first the estimates were that the supply would recover in the second half of the year, now the improvement forecasts point to 2022 . In order to adapt the rhythm to the availability of the components, stoppages and delays have been made in the cadence of the production lines of the factories.

In Spain, so far this year practically all the factories have suffered production stoppages due to the semiconductor crisis.

The last to suffer these dire consequences is Volkswagen Navarra , which yesterday approved, together with the majority unions, a new Temporary Employment Regulation File for productive causes that will last until December 31, 2021.

Another example is the Seat plant in Martorell , which will be closed this week and its Line 3 (responsible for the manufacture of the Audi A1) will stop until July 2 .

Forecasts suggest that the shortage of microchips will continue to be a problem for vehicle factories, as ANFAC points out, “at least during the first half of 2022.”

All this has caused the production of vehicles in Spain to close the first five months of the year with a fall of 19% or what is the same, to 1,032,881 manufactured units.

In Europe, markets such as France (-22.7%), Germany (-26.7%), United Kingdom (-30.8%) and, to a lesser extent, Italy (-19.3%) also accumulate significant falls until May.

Despite everything, Spain remains the eighth largest producer in the world ahead of Brazil since February 2020. While in our country 1,032,881 units were assembled in the first five months of the year, in Brazil 981,523 vehicles were manufactured between January and May, according to data from the Anfavea employers’ association.