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SCA · 01-24-2022, 10:06 PM

Any prediction that the new year was going to herald the end of the global microchip shortage and its persistent interruption of badly needed vehicles was wishful thinking.

Insufficient chip supplies will probably keep tripping up the industry for months to come, say auto executives and production forecasters, even as some automakers make deals to pay more for chips to get a higher priority among customers, and even as chipmakers promise new capacity plans.

"We're seeing some relief for manufacturers, but the problem isn't going to go away anytime soon," said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions. "New chip factory capacity is being built. But it will be two or three years before it has an impact on supply."

January started off calmly enough. Few plants around the world experienced problems in the first days after the holiday break, even after 2021 ended with more than 10 million vehicles being canceled from production plans last year.

But that quiet didn't last long.

The supply shortage prompted Ford Motor Co. to reduce scheduled production at its plants in Flat Rock, Mich., and Oakville, Ontario. And last week, Toyota Motor Corp. said the shortage will force it to slash its worldwide February output by 150,000 vehicles to about 700,000. Toyota Motor North America said it will lose production of 25,000 to 35,000 much-needed vehicles from its North American plants next month.

As a result, Toyota will fall short of the 9 million-vehicle global production target it has been pursuing for this fiscal year — despite strong current consumer desire to buy new cars and trucks, the company said.

More production cuts are going to follow across the industry, predicted Fiorani, whose firm has tracked the chip shortage impact on worldwide output since the crisis erupted a year ago.

"This isn't over," he said. "And it's not going to be over anytime soon."

But when?
Last week in China, the industry ministry warned companies there to expect tight supplies of semiconductors over a relatively long period.

According to a Reuters report, Luo Junjie, an official with the Ministry of Industry and Information Technology, used a press conference to encourage key businesses to increase investment and promote better supply capacity of the entire chip industry chain.

Separately, in an interview reported last week by Bloomberg, Intel CEO Pat Gelsinger urged the U.S. and Europe to push ahead with efforts to foster chip manufacturing, arguing that government funding is needed to address an over-concentration of production in Asia.

"Let's not waste this crisis," he said. "It's good economics, but it's also national security."

Intel said Friday, Jan. 21, that it plans to spend $20 billion on a massive chipmaking hub on the outskirts of Columbus, Ohio, and Gelsinger indicated that some production would go to the auto industry.

The U.S. chipmaker is also planning to build a production base in Germany and other facilities in Italy and France.

But the question around the industry: When will adequate supplies of chips reach automakers?

"It's a complex situation," said Matteo Fini, IHS Markit vice president for automotive supply chain, technology and aftermarket. "The situation has eased somewhat, but it will continue through the midyear. At that time, we expect to see some new chip capacity come online, although it will not be a great deal.

"But then," he added, "a new situation will arise: The industry will begin to have a worse issue with what are known as analog chips. That will be a new layer of issues to deal with."

Analog chips are very widely used and perform relatively basic functions in automobiles, such as computing vehicle signals.

The chip industry has been evolving toward more sophisticated versions, and automakers are adopting those. But vehicles still rely on large numbers of analog chips.

01-24-2022, 10:06 PM	#3
SCA Jaded Join Date: Oct 2003 Posts: 9,113	Any prediction that the new year was going to herald the end of the global microchip shortage and its persistent interruption of badly needed vehicles was wishful thinking. Insufficient chip supplies will probably keep tripping up the industry for months to come, say auto executives and production forecasters, even as some automakers make deals to pay more for chips to get a higher priority among customers, and even as chipmakers promise new capacity plans. "We're seeing some relief for manufacturers, but the problem isn't going to go away anytime soon," said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions. "New chip factory capacity is being built. But it will be two or three years before it has an impact on supply." January started off calmly enough. Few plants around the world experienced problems in the first days after the holiday break, even after 2021 ended with more than 10 million vehicles being canceled from production plans last year. But that quiet didn't last long. The supply shortage prompted Ford Motor Co. to reduce scheduled production at its plants in Flat Rock, Mich., and Oakville, Ontario. And last week, Toyota Motor Corp. said the shortage will force it to slash its worldwide February output by 150,000 vehicles to about 700,000. Toyota Motor North America said it will lose production of 25,000 to 35,000 much-needed vehicles from its North American plants next month. As a result, Toyota will fall short of the 9 million-vehicle global production target it has been pursuing for this fiscal year — despite strong current consumer desire to buy new cars and trucks, the company said. More production cuts are going to follow across the industry, predicted Fiorani, whose firm has tracked the chip shortage impact on worldwide output since the crisis erupted a year ago. "This isn't over," he said. "And it's not going to be over anytime soon." But when? Last week in China, the industry ministry warned companies there to expect tight supplies of semiconductors over a relatively long period. According to a Reuters report, Luo Junjie, an official with the Ministry of Industry and Information Technology, used a press conference to encourage key businesses to increase investment and promote better supply capacity of the entire chip industry chain. Separately, in an interview reported last week by Bloomberg, Intel CEO Pat Gelsinger urged the U.S. and Europe to push ahead with efforts to foster chip manufacturing, arguing that government funding is needed to address an over-concentration of production in Asia. "Let's not waste this crisis," he said. "It's good economics, but it's also national security." Intel said Friday, Jan. 21, that it plans to spend $20 billion on a massive chipmaking hub on the outskirts of Columbus, Ohio, and Gelsinger indicated that some production would go to the auto industry. The U.S. chipmaker is also planning to build a production base in Germany and other facilities in Italy and France. But the question around the industry: When will adequate supplies of chips reach automakers? "It's a complex situation," said Matteo Fini, IHS Markit vice president for automotive supply chain, technology and aftermarket. "The situation has eased somewhat, but it will continue through the midyear. At that time, we expect to see some new chip capacity come online, although it will not be a great deal. "But then," he added, "a new situation will arise: The industry will begin to have a worse issue with what are known as analog chips. That will be a new layer of issues to deal with." Analog chips are very widely used and perform relatively basic functions in automobiles, such as computing vehicle signals. The chip industry has been evolving toward more sophisticated versions, and automakers are adopting those. But vehicles still rely on large numbers of analog chips.