Title: Microchip Shortage Increasing Vehicle Lead Times - Operations - Automotive Fleet
Headings: Microchip Shortage Increasing Vehicle Lead Times
Operations
Microchip Shortage Increasing Vehicle Lead Times
What Has Caused this Shortage?
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Content: Subaru said the year-end projected volume target is unchanged. Volkswagen has reduced production in China and Germany as it is having difficulty sourcing microchips for its electronic stability controls and ABS braking systems. Likewise, but for different reasons, Toyota reduced output of the Tundra at its San Antonio plant, and similarly FCA and Honda have reduced output at some of their plants due to the chip shortage. What Has Caused this Shortage? The shortage of semiconductors is occurring as a result of the companies that manufacture these products have allocated more of their production volume to meet the surging demand from the consumer-electronics industry, which saw sales of electronics products spike during the stay-at-home mandates created by the pandemic. While the auto industry buys a lot of semiconductors and electronics, it is small compared to what the consumer electronics industry purchases; the consumer electronics industry is a much bigger customer for these components than the auto industry. To put this in perspective, while there may be 100 million vehicles built per year worldwide, this compares to 1 billion smartphones manufactured each year. And smartphones are only one segment of the much larger consumer electronics industry. So, there is a lot of competition for a finite inventory of electronics and semiconductors that will continue until production can increase to meet demand.