Semi Conductor Chip Causing Motor Industry Delays

semiconductor chip

Image credit: Autoblog

 What is a Semi-Conductor Chip?

A semiconductor chip is a product that is used in numerous electrical devices such as computers, smartphones, game consoles & vehicles. In simple terms, they allow for electricity to conduct through them. Semiconductor chips can often also be altered to fit the needs of the product which they are being placed into and due to this, it allows for their widespread use in many household items.

 What impact has the Semi-Conductor Chip had on the motor industry?

Over the past few months, demand in these chips have increased massively but at the same time, production of these chips has also slowed down as a result from Covid-19 & staff shortages/factory closures. This has ultimately triggered a global shortage which is currently affecting all global markets who consume them, including the automotive industry. The usual lead times before this shortage for a semiconductor chip was in the region of 12-15 weeks however now, manufacturers are claiming a production time of at least 22 weeks.

 How has the motor industry reacted to the Semi-Conductor Chip shortage?

Delays have already started to be incurred by numerous car manufacturers with some brands fully closing their ordering on specific vehicles and pausing production until these chips are readily available again. On the other hand, some manufacturers are also sacrificing features on vehicles in order to save on chip consumption so they can still build vehicles but without certain pieces of it’s a standard specification.

 How long will the delays last due to the Semi-Conductor Chip shortage?

These delays have been reported to expect to last anywhere between a few weeks to potentially 6 months as of right now but then again, nobody can be certain on how long these delays will exactly last. Each manufacturer are calculating lead times of models based on information they currently have and can only anticipate on when vehicles will expect to be built. To put this into context, the global auto industry are expecting to produce between 1.5 million and 5 million fewer vehicles than expected for the calendar year of 2021.

 What should you do differently, due to the Semi-Conductor Chip shortage?

Due to these unexpected & potentially prolonged lead times that have been announced, ordering a vehicle early to compensate for these delays could well be an option to look into. With stock options of vehicles expected to be in very low numbers, it is better to be prepared then be without transportation.

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27th April 2021

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