By Andrea Hargraves 
The auto sector was forced to pull back from production. Toyota alone reduced the number of cars planned for September by 40%. The brutal boost in the semiconductor industry is not enough to demand.
They have no more than 5 to 7 nanometers, but they are essential for making the brains of all kinds of systems that power devices ranging from simple household appliances to smartphones, and from cars to robots. And with only half a dozen producers in the world, even giants, especially China, recent unforeseen events, from the epidemic to natural disasters, to trade embargoes, have restricted chip production. And their shortages leave the global industry in a bind, particularly in the automotive sector, where semiconductors are increasingly becoming a component of in-flight safety and entertainment equipment.
The odds are not good when it is projected that even the measures taken to tackle the chip crisis – including the new Bosch plant in Dresden, dedicated exclusively to its production in series and in quantities double current figures – will not amount to alleviating a problem whose consequences are already affecting the world’s giants. This week, Toyota, the world’s largest car maker that has weathered the crisis so far, and reached record profits of 7 billion euros in June (+465% compared to the previous year), announced that it will have to downsize its global car. by 40% in September. To FT, a spokesperson for the manufacturer, Kazunari Kumakura, justified the “sudden and drastic decision to cut production brutally” with the “increasing difficulty of ensuring the supply of the necessary quantities of ingredients”. This is less than 360,000 cars, out of a total of 900,000 scheduled, that will leave the auto giant’s factories next month, after a new outbreak of the Covid virus in Malaysia and Vietnam led to a decline in production of chips and other electronic components. News led the Japanese manufacturer to lose 14 billion of its value on the stock exchange.
Autoeuropa and Bosch Braga also suffer
In Portugal, a chip shortage has already taken its toll, even causing a nearly 30% drop in car production in June, ACAP, Associação Automóvel de Portugal, revealed, with a lack of components forcing Autoeuropa to halt. Bosch Car Multimedia, in Braga, which develops solutions for several car brands, has been suffering from a shortage of components since before the summer. And if he did not have to close his doors, “some supply problems” forced the Portuguese plant to lay off workers due to the “aggravation of the situation”, forcing them to stop working for a long time.
Even as China increased its chip production by about 50% in the first six months of this year compared to production up to June last year – it currently produces more than 1 billion integrated circuits per month, in July Beijing sold more than 30 billion chips to factories across the world. Worldwide – the answer being pursued is far from what would be necessary to solve the shortage of semiconductors on the market. And there are even those who expect this crisis to continue until 2022, even with Chinese reinforcements and the help of Bosch, which has a continuing investment of one billion euros in the Dresden plant to boost production. From September. It’s the biggest investment ever by the German giant and it intends to ramp up the distribution of chips to the auto industry, as it explained to Reuters in June, with 300mm silicon wafers (twice as much as is common), in this way to get more chips per chip. .
The effects will continue next year
Speaking to the press after a meeting with investors, chief technology officer Ndivia said on Thursday that despite agreements reached “to ensure long-term supply, in order to achieve market expansion goals”, “we will continue to face difficulties in the vast majority of countries.” . Next year”. Luca de Meo, Renault’s chief executive, is also not too optimistic, predicting that what he sees as a “structural problem” will remain “until 2022”, adding to tensions even if production capacity improves. Speaking to Reuters, Harald Wilhelm, Daimler’s chief financial officer, joined the chorus to say he sees the semiconductor crisis continuing to affect next year, and continuing to affect auto sales.
The problems that spread among the biggest brands. Earlier this week, Volvo, owned by China’s Geely, joined the embattled group of manufacturers, announcing the halt of production at its Swedish plants. Already on Thursday, Elon Musk pointed the finger at semiconductor suppliers, to justify the accumulated delays in production at Tesla. “As has already been publicly disclosed, we are operating under severe supply chain constraints for some of the auto industry’s standard chips. The two most problematic so far are Renesas and Bosch (Japanese),” the entrepreneur wrote on Twitter.
The good news is for chipmakers, who have seen their bottom line earnings soar. With increased demand and growing shortages in the market: Even as automakers cut global production, chip manufacturers improved their results by an average of more than 20% in the first half of this year, according to specialist sites.