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Is a lack of understanding adding to the auto chip crisis?

The pandemic has affected so many aspects of the global economy but none more so than the automotive sector, where the certainties of recent years have given way to intense competition from the consumer electronics space.

According to Reuters, car manufacturers now face a stark future: pay up, stock up or risk getting stuck on the sidelines, as chipmakers chase more lucrative business elsewhere.

The semiconductor shortage the automotive industry is confronting has highlighted the fact that the supply chain is one that is no longer centred around cars. As a consequence, the industry is lobbying governments in Europe, and elsewhere, to support the development of more chip-making capacity.

Some see this as a 'welcome comeuppance' for an industry that has tended to be too quick to cancel orders in a slump, only to then demand increased investment in a recovery.

According to one European chipmaker, “If the carmakers are asking us to invest in new capacity, can they please tell us who will pay for that idle capacity in the next downturn?”

With Apple spending more on chips than the entire auto industry is it any surprise that chipmakers are focused on delivering leading edge technology, rather than devoting production to the basic chips that the car industry tends to use?

Chipmakers are also said to have been surprised at how little the car industry understands how the chip industry works.

That’s a worry when both are going to have to work far more closely together as electric vehicles are more widely adopted and features such as assisted and autonomous driving, requiring more advanced chips, become more common.

Neil Tyler

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