【EV Vision Report】The global car chip famine continues to spread, car companies have been forced to reduce production, this year, including General Motors, Ford Motor and Hyundai Motor and other automakers expect that the chip tension that lasted for nearly two years is expected to be alleviated in the second half of 2022, but major chip manufacturers are not so optimistic.
The electrification transition is accelerating at an unexpected pace. Divergent views on this most pressing issue have prolonged uncertainty about the recovery and transformation of the automotive industry.
Consultancy Alix Partners estimated in September that the chip shortage would cost the global auto industry $210 billion in revenue and 7.7 million vehicles in production in 2021.
But according to major car companies, the trend seems to be changing.
According to Reuters, GM CEO Mary Barra expects semiconductor shortages to ease in the second half of the year, and Hyundai expects chip supply to return to normal levels in the third quarter of this year.
Tesla took a number of ways to manage chip supply last year, including writing new software to keep abreast of chip changes. CEO Elon Musk said on last month's earnings call that as chip factories increase capacity and automakers recognize that the panic purchase of chips has led to slower supply chains, chip shortages are not a long-term problem, chip shortages will be better than last year, but will still limit all factory capacity, and it seems that chip shortages are expected to continue this year and will not ease until next year.
Affected by the continuous shortage of global chip supply, a number of Ford's main products, including the F-150 Lightning electric pickup truck, have been forced to reduce production since February 7, closing 8 production lines in the United States, Canada and Mexico, and maintaining a single-shift system for the rest of the production lines, and supply chain problems will lead to production capacity and sales that cannot be met this season.
Ford CEO Jim Farley said in an interview late last year that the chip supply problem is not difficult to solve, as long as the production of electric vehicles (EVs) is prioritized before the internal combustion engine (ICE) models.
Ford expects a significant improvement in the second half of the year after sluggish car sales in the first quarter. Ford has partnered with U.S. chipmaker Global Foundries.
Murat Aksel, head of procurement on Volkswagen AG's board of directors, expects the global chip shortage not to end within this year, but should ease further slightly in the second half of the year. He said that as more chip production capacity goes online, it will be easier to make reliable predictions in 2023, the demand for the automobile manufacturing industry continues to rise, and there are obviously structural problems in chip supply and demand.
In an interview with the German newspaper Handelsblatt last June, Aksel said that chip expansion took two years and a long-term shortage rate of about 10%.
On January 18, Herbert Diess, ceo of Volkswagen Group, admitted in an interview that although Volkswagen has adapted the software to adjust the chip supply, the correction may not be fast enough.
Compared with these car companies, the major auto chip manufacturers are not so optimistic.
NXP Semiconductors said it could not get out of the imbalance between supply and demand this year, and despite the increase in production, the supply shortage will continue.
Infineon said the balance between supply and demand for some chips will improve in the second half of this year, but the mature chip market, which is crucial for automakers, will continue to be tight. "The supply constraints are far from over and will continue until later in 2022," Reinhard Ploss, CEO of Infineon, said on an investor call, fearing that the spread of the coronavirus variant would lead to plant closures, thus constraining supply.
STMicroelectronics is one of Tesla's chip suppliers. CEO Jean-Marc Chery announced on January 27 that ITF's 2022 capex estimate will be between $3.4 billion and $3.6 billion, further expanding chip capacity.
Chip factories typically take years to build and then years to reach maximum capacity. ST said in November that it would not see a significant increase in production capacity until 2024 or 2025.
Jean-Marc Chery said the current backlog of orders is about 18 months of visibility, much higher than the current and planned 2022 production capacity.
In the past year, due to the continuous shortage of automotive chips, the automotive industry has been seriously affected, and assisted driving, power battery management and various safety systems have all required the use of a large number of chips. Forecast agency Auto Forecast Solutions (AFS) pointed out on February 7 that the chip shortage will lead to a reduction of more than 1 million global car production in 2022.
Chip demand is booming, and global chip manufacturers have expanded capital expenditure to expand production to meet the increasing demand.
According to research firm Gartner, global semiconductor companies will spend $146 billion on new plants and research and development in 2021. TSMC, Samsung and Intel, the world's three largest chip manufacturers, account for 60% of them.
TSMC, the world's largest chip foundry, has pledged to invest $100 billion over three years to boost its production of cutting-edge chips for manufacturing a variety of chips.
Rival Intel announced in March that it plans to spend $20 billion on two new chip factories in Arizona and start operations in 2025. The two plants will be an important part of Intel's plans to expand chip production.
South Korea's largest company, Samsung Electronics, revealed that 90% of its 48.2 trillion won ($40.1 billion) of its capital expenditure in 2021 will be used for the chip business.
Infineon, Europe's largest chipmaker, will spend an additional 2.4 billion euros ($2.7 billion) to expand its operations to meet demand.
Even with a lot of money, the semiconductor industry has failed to produce enough chips. Bernstein analyst Stacy Rasgon believes that while there is still a shortage and the reaction is quite positive, he is a little nervous about what could happen in 2022.
For example, automotive chips have now exceeded the normal supply by 40%, while terminal markets such as notebook computers and CPUs have begun to correct. Dealers seem to be actively building up large inventories, and there is already a gradual discussion about the supply chain, and while supply is still tight, there are signs of normalization, which is often a turning point.
Citi analyst Christopher Danley also expressed optimism about the outlook, but is concerned that the rising momentum of the chip industry has come to an end, and the supply chain has seen higher pricing in the fourth quarter of 2021, driven by healthy terminal demand, extended delivery cycles and higher pricing, and is believed to continue to drive the next wave of growth.