The semiconductor shortage could have far-reaching consequences and long-lasting effects that may ensure it has a greater effect on the automotive industry than the coronavirus pandemic, the CEO of VNC Automotive has revealed.
Semiconudctor. Credit: Pok Rie / Pexels
The semiconductor shortage has caused delays and production pitfalls and could stand to last far longer. Credit: Pok Rie / Pexels
Tom Blackie has pointed to continued issues regarding supply chains and production shortages leading to fears for a reduction in functionality and increasing costs as the industry prepares to weather the shortages.
Many automakers had to halt production earlier this year - severely hurting production for the first half of the year - with new shortages causing new production delays as chip supply continues to face bottlenecks.
Read more: Mercedes cuts production on chip shortages
The semiconductor shortage has become a major topic for international politics, with several global leaders, such as the US and EU, vowing to tackle the issue through increased domestic production.
This may make Western automakers less reliant on primarily East Asian suppliers.
Tom Blackie, the CEO of VNC Automotive. Credit: VNC Automotive
However, those that do have supply are also seeing price hikes due to the difficulties in maintaining stock and raw demand.
“Some of our suppliers are seeing prices for chips that are more than 30 times higher than before, and at that level, their use is no longer sustainable," Blackie said.
“We’re even seeing vehicle buyers and fleet operators having to consider purchasing models that aren’t on their preferred lists because that’s all that’s available. At a time when the industry is asking people to consider making the switch to EVs, supply restrictions are leaving them frustrated," he added.
The coronavirus pandemic has provided the perfect environment for the chip shortage. A greater number of people working from home coupled with greater pushes for sustainability and electrification in pandemic recovery has caused demand for batteries to skyrocket.
Furthermore, fires at key suppliers have further compounded the issues faced by major automakers.
Read more: The semiconductor shortage may last into 2022
Blackie said: “Suppliers and OEMs may now be forced to simplify their designs to use fewer complex components that are still available, and we’re concerned this will lead to a reduction in functionality at a time when consumer expectations have never been higher.
“It’s also possible that systems hurriedly adapted to use a simpler component set may quickly be left behind as future generations of mobile phones cease to support the older platforms they may be built on.”
Some major automakers, such as Nissan and Bosch, are looking to tackle the issue by investing in battery gigafactories in order to boost domestic supply. This should make their supply chains more robust in the event of further natural disasters and global shortages.
VNC Automotive has been looking at ways it can improve the situation for its customers by replicating much of the processing normally performed in silicon with rapidly deployed software instead.
The company itself specialises in increased connectivity within the automotive sector, having recently launched a product focusing on advanced systems integration for police and emergency services vehicles.
One of the main materials in the creation of semiconductors and vehicle batteries is lithium - primarily for use in lithium-ion batteries - the current leading method for electrification in vehicles.
The EU's first major lithium project, Zinnwald, has recently entered the feasibility phase, which could help boost the EU's domestic lithium supply in a bid to increase supply chain resilience.
Read more: Zinnwald: Europe's first major lithium project enters feasibility phase
The project is looking to commence production at some point during the mid-decade, well before the EU's planned ban of "unsustainable batteries", set to come into effect in 2027.
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