The fact that there is a global shortage of semiconductors has most likely not escaped anyone who has followed technological news during the winter. One of SweClocker’s most active forum threads ever deals with the lack of graphics cards, while store shelves intended for other components like processors are empty – but few warehouse shelves are currently as empty as the automotive industry.
We have previously reported on how the shortage of circuits looks to lead to a global disruption of the order of one million cars in 2021, of which just over 670,000 vehicles are expected to remain on the track during the first quarter of the year alone. Now reports Reuters about how a traditionally spoiled industry is starting to wake up to the fact that its focus is not so high-tech.
The car sector has been used to the fact that the whole supply chain is centred around cars. What has been overlooked is that semiconductor makers actually do have an alternative. – Ondrej Burkacky, McKinsey
Management consultant Ondrej Burkacky tells Reuters that the car industry has become accustomed to the world revolving around them, and that just in time-delivery of components including electronics has been the norm for several decades. At the same time, semiconductor suppliers are slowly getting enough of the automotive industry’s demands for availability and fluctuating order intake.
As an example, it is highlighted that Volkswagen in the spring of 2020 flagged that demand for vehicles is expected to resume later in the year – something that also happened. What Volkswagen does not reflect on is that the company at the time cut the number of orders from circuit suppliers as a result of which they lost predictability, as an anonymous representative of a European semiconductor manufacturer points out.
Last year we had to furlough staff and bear the cost of carrying idle capacity. If the carmakers are asking us to invest in new capacity, can they please tell us who will pay for that idle capacity in the next downturn? – Anonym källa hos europeisk halvledartillverkare
As a result of lost orders, most subcontractors to the automotive industry were forced to lay off staff – including the semiconductor industry. This in turn led to reduced capacity, capacity which was then lacking when the car industry decided it was time to resume production. The problem is most evident in the semiconductor industry, where the time for manufacturing a circuit is measured in months.
Furthermore, Reuters reports on how circuits to the automotive industry in general are simple but specialized, made on obsolete nodes. Companies that run the factories in question are reluctant to invest money in older manufacturing technology, at the same time as the circuits that are produced cannot be sold to industries other than the automotive industry in cases where many circuits are produced.
Neil Campling, technical analyst at Mirabaud, points out another variable in the equation – the automotive industry is a relatively small customer. The entire industry buys circuits worth about $ 40 billion annually – one-tenth of the global market. This is to face Apple, which spends more on circuits for only its Iphone product line during the same time period.
We got a call from one auto maker that was desperate for supply. They said: “Why don’t you run a night shift to increase production?” What they didn’t understand is that we have been running a night shift since the beginning. – Annan europeisk halvledartillverkare
In addition, there is a report of a lack of understanding of circuit manufacturing among car manufacturers. A semiconductor manufacturer is said to have been asked “why don’t you add a night shift to increase production?”, Where the answer was unsurprising was that production is already in full swing, around the clock.
Elsewhere reports today Digitimes (payment wall) that the automotive industry has realized that the hole it has dug itself in requires investment. TSMC has therefore started a so-called super hot runprocess of circuits intended for the automotive industry – where the price increase is about 20 percent compared to a normal production process, while the production time can be cut from normal 40-50 to 20-25 days.
The back with a super hot run is in addition to increased cost due to lower efficiency in production equipment also lower yields, the number of working circuits per completed silicon wafer. wafer). TSMC is also not said to be alone in setting up, as other Taiwan-based contract manufacturers have “for the most part” agreed on similar arrangements according to Digitimes.
Reuters also reports on how circuit suppliers to German car manufacturers such as Bosch and Infineon are said to start construction of new circuit factories later this year. Manufacturing in these factories, however, is not expected to take place for several years, which is why unorthodox methods such as super hot runs with external players is the industry’s best chance – and Infineon is already a customer of TSMC.
However, the damage to the automotive industry has already occurred – the analysis company IHS Markit has raised the forecast of vehicle loss for the year to include one million light vehicles during the first quarter. IHS Markit also notes that the lead time when ordering a microcontroller has doubled to 26 weeks, and that the supply shortage is expected to reach its peak in March.
Up to the end of the second quarter, the industry will have to manage at the lean inventory level. – Jean-Marc Chery, VD STMicroelectronics
Directors of European semiconductor companies are also not optimistic about a complete solution in the near future. STMicroelectronics CEO Jean-Marc Chery recently said at an investor conference that “low inventory levels” will apply during the first half of the year – which means that vehicle manufacturers will still have to wait for circuits.
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Source: SweClockers by www.sweclockers.com.
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