Though forecasts predict the global semiconductor shortage will not right itself until 2023, Daimler CEO Ola Kallenius remains hopeful that it will improve in Quarter 4 of 2021.

Volkswagen Purchasing Chief Murat Aksel echoed his sentiments, after stating that semiconductor supply remains very volatile and tight in the third quarter. “We hope for a gradual recovery by the end of the year,” he said.

Both predict recovery could be slow. “Several chip suppliers have been referring to structural problems with demand,” Kallenius said at the IAA Munich auto show. “This could influence 2022 and [the situation] may be more relaxed in 2023.”

BMW CEO Oliver Zipse reported he expects supply chains to remain tight well into 2022, at the event. However, he did not forecast long-term supply issues, noting the automotive industry remains an attractive client for chip manufacturers.

But with semiconductor chip demand soaring, Volkswagen Group CEO Herbert Diess predicted shortages will continue for months or even years. “The Internet of things is growing and the capacity ramp-up will take time. It will be a bottleneck for the next months and years to come,” he said at the conference.

The auto industry worldwide will need around 10% more production capacity to meet demand for chips, Aksel said.

Renault CEO Luca de Meo said the situation regarding the shortage was tougher than expected during the third quarter. He too predicted the fourth quarter will usher in some improvement. Renault will still cut production by 200,000 cars in 2021 because of the shortage, de Meo said.

The COVID-19 pandemic shuttered automotive plants in 2020. Manufacturers responded by ordering fewer chips. The electronics industry picked up the extra supply. Now, a series of supply chain disruptions, including a shortage of materials to make the chips and weather issues, continue to impact supply. 

Manufacturers cannot product many vehicles without these chips. Cars have become dependent on chips to manage fuel economy, engine operation driver assistance features, and more. 

OEMs are responding to the shortage by trimming production and sales projections. 

Daimler recently cut its annual sales forecast for its car division, projecting deliveries will be in line with 2020, rather than up significantly.

Factory shutdowns in Malaysia, which is a major center for chip testing and packaging, because of COVID outbreaks, have affected chip manufacturing in the third quarter.


Originally posted on Auto Dealer Today

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