Why the semiconductor shortage is shaking the automotive industry and many other industries

The Covid-19 pandemic has exploded the demand for these components that are found in our cars, our phones or in our household appliances. For consumers, delays and price increases are to be feared.


 

You are missing a chip and everything is turned upside down. In short, it is the difficult situation that many industries are going through in recent months faced with the shortage of semiconductors, these electronic chips which allow information to be transmitted, stored and calculated“, as summarized by Mathilde Aubry, economist and teacher specializing in digital transformation at the Normandy School of Management. For a year now, while demand has peaked, factories that depend on it have been idling, which affects, among other things, the production of computers, cars and telephones.

For Mathilde Aubry, the current crisis is due to the Covid-19 pandemic, but not only. “The semiconductor industry is extremely complex, details the specialist, it is very difficult to balance demand there. The cyclicality of the market is an integral part of its functioning. ”

The year 2020 was already shaping up to be tense for this cutting-edge industry, with in particular the arrival of 5G, the boom in connected devices and artificial intelligence. This was without counting the coronavirus crisis which, more particularly due to periods of confinement and the rise of teleworking, has boosted sales of computers, tablets and video game consoles. Mechanically, the global demand for semiconductors has exploded, quickly exceeding the existing supply.

Significant delays in factories

The shortage has brought some factories to a halt, particularly in the automotive industry. “After telecommunications, the automobile is one of the largest consumers of semiconductors, underlines the economist, electronics are present at all stages, in almost all equipment manufacturers. The consequences for this sector are dramatic.”

In France, the factory of the Stellantis automobile group in Rennes-La Janais (Ille-et-Vilaine), for example, experienced more than a week of shutdown in April, an unprecedented situation for this factory which employs more than 2,000 people. . Elsewhere in the world, factories of the American manufacturer Ford or the Renault group are also idling. They reserve the precious chips to their high-end models or those that sell best, as reported by the Financial Times(article in English and for subscribers).

The other large sector affected by this shortage, “It’s consumer electronics” affirms Mathilde Aubry. From personal computers to household appliances to video games, many everyday objects are becoming more and more difficult to manufacture. “These are products that we can do without for a while, tempers the economist, so there will be no empty shelves in the stores, but we will certainly feel a rise in prices. ” The latest example, the launch of the new PlayStation and Xbox consoles was marked by stockouts, and strong speculation on resale sites.

A production synonymous with independence

In addition to our appetite for electronic components, the semiconductor crisis above all underscores the need for certain countries to regain control over the manufacture of these chips. “It’s a highly geopolitical subject, decrypts Salah Nasri, co-organizer of the International Summits of Semiconductor Producers (ISES). “Everyone wants to develop their own sector, governments are looking into the issue and significant funding could be released.”

In the semiconductor sector, three companies are in the lead: the American Intel, its South Korean competitor Samsung, and the TSMC group, based in Taiwan. Between the electronic chip and the final device there are many intermediaries, who seek to build up their own stocks during this exceptional period.

On the side of the United States, the time has come to take stock. “The US administration has ordered an in-depth study of this sector, to better understand its supply chain”, details Salah Nasri. As for Beijing, its strategy “Made in China 2025” clearly announces the color. “The country seeks to be self-sufficient, with at least 50% of semiconductors made on its soil“, Specifies the specialist.

What about Europe? The task seems more difficult for the Old Continent, which manufactures “less than 6% of global semiconductor production“, Recalls Mathilde Aubry. “It’s really a political will, she explains, whether in Taiwan or the United States, they [les producteurs] have been on IV grants and supports. ” To catch up, the European Union has just launched an initiative (English content) which aims to bring together its electronics and embedded systems industries.

But without sufficient funding, Mathilde Aubry fears that this quest for technological independence will not succeed. “Are we going to succeed in rebuilding and developing a European semiconductor industry? or are we in a bit of a hurry to review a production that comes from outside?“The question could be answered within three to six months, that is, the time that this shortage is absorbed, according to analysts.





 

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