Why is there a shortage of semiconductor chips in supply to car manufacturers?
As we know car manufacturers use microchips in a lot of the car’s systems, so even their slight delay can have disastrous effects on the manufacturing and fabrication of such products. In recent times, these delays are happening a lot and transforming into a shortage. Furthermore, it is resulting in massive bottle-neck of vehicle orders.
Some of the key reasons behind the shortage of new cars in the UK at the minute are:
In the past one and a half year, the semiconductor chips global supply chain disrupted due to the COVID-19 issues and complications. Like every other industry, the automobile and chip manufacturing industry also stopped working during the pandemic. The large-scale factories shut their doors due to the government mandate. The excess of caution for employees’ health was another reason for the halt. Ultimately, it caused a backlog in manufacturing along with an increment in the electronics demand.
We all know that everyone stopped purchasing new vehicles at the beginning of the global pandemic. Therefore, the orders from the car manufacturers for the semiconductor chips dropped abruptly. At this time, the technology companies were procuring semiconductor chips left, right, and centre. These companies include laptop and cell phone manufacturers. At that time, Sony was the most noticeable firm due to its endless demand for the latest PlayStation 5.
2. Factory fire
In addition to the COVID-19, a plant (Renesas) for semiconductor microchips production in Japan caught fire in March. Consequently, it turned out even with more delays in the chip manufacturing as it caused damaged damage to seventeen of its machines. Some news says that semiconductor chip manufacturing at the plant would not initiate again until July (at least).
A storm also came in Texas, which setback the allocation of semiconductor chips and hampered its production process even further. The United States produce about 12% of total chips in the whole world, mainly in Texas. A severe storm hit Texas in February, which resulted in the halt of chips’ production and power cuts. It will almost take four months to get back to normal since it was way much catastrophic.
Some new cars affected by the semiconductor chip shortage in the UK
- Mercedes paused the production of GLC.
- Mazda reduced its manufacturing number by 7,000 cars in the first quarter of 2021.
- Mini closed its Oxford plant that produced 5-door and 3-door hatchbacks.
- Volkswagen manufactured 10,000 less than planned new cars in 2021.
- Toyota suspended manufacturing in two factories in Japan.
- Hyundai halted the production of some SUVs.
- Tesla also got affected by the shortage of microchips.
- Mitsubishi dropped the car manufacturing number by 16,000 in January and February.
- Jaguar Land Rover revised its car manufacturing schedule for two factories in the UK.
- Peugeot, Citroen, Fiat, Vauxhall, Chrysler also slowed down their car production process.
Some other car models affected by lack of semiconductor chips in the UK are Audi Q7/ Q8, Volkswagen Touareg, Jeep Grand Cherokee, Porsche Cayenne, Chevrolet Camaro, Malibu, Traverse, Equinox, Ford F-150 Explorer, Mustang, Nautilus, Ford Bronco Sport, Jaguar XE/ XF, Dodge Durango, Range Rover Evoque, Mercedes Benz C-class, EQC, GLC, BMW X1/ X2, Mini Cooper, Subaru Ascent, Legacy, Impreza, Outback, Nissan Altima, Maxima, Leaf, Rogue, Murano, Honda Civic, Accord, Odyssey, Insight, Renault, and many more.
It does not seem that the shortage of semiconductor chips will end anytime soon. Probably, it will come to an end by the year 2022. Almost 2.5 million new cars got delayed in the first half of 2021 all over the world. Therefore, chip shortage is the key reason behind the shortage of new cars at the minute in the UK too. It has led people to buy used cars instead, and we can see a significant increase in the purchasing of second-hand vehicles lately.