Chip Shortage Forcing Automakers to Ditch Tech


After months of seeing factories idled, it seems that the global semiconductor shortage has encouraged the automotive sector to rethink some production strategies. Numerous brands have opted to strip vehicles of specific features to help offset the ever-worsening chip problem, occasionally supplanting them with older hardware.

Well, well, well. It looks like the push into electromobility hasn’t gone quite as planned and the industry has come crawling back to analog in some cases. Though it would be premature to break out the campaign and declare the old ways superior for all time. The resurgence of analog hardware is likely to be short-lived, ending the second the semiconductor shortage lets up. As much as your author wants to believe the industry will learn a lesson about not putting all your eggs in one basket, it didn’t seem to in the last century and is unlikely to come around during this one. 

While we knew automakers had begun cutting corners and thinking outside the box to address the chip shortage, reporting from Bloomberg opened our eyes to some of what’s happening in markets outside of our own. Many automakers are now stripping high-end features from cars where customers wouldn’t normally expect them so they can be reallocated for premium or high-volume models. For example, the Peugeot 308 going back to analog gauges and Renault’s Arkana is settling for a smaller central display without navigation.

In fact, neutering GPS has been a common solution for manufacturers encountering a chip deficit. Nissan has also cut navigation as standard equipment from some products so they could be used more popular models and we’ve heard rumors that other manufacturers are following suit. But it’s not just the flashy stuff. General Motors announced it will build certain 2021 light-duty full-size pickup trucks without a fuel management module, worsening fuel efficiency by around a mile per gallon.

There have also been cutbacks on some driving aids, though not the outright massacre some of us had been hoping for. Ram 1500s no longer offer blind-spot monitoring and nixed its digital rearview mirror, customers now have to order them special. It’s something we’re expecting from other manufacturers, especially since it provides them an opportunity to charge extra for something that used to be standard content. We’re hoping the same happens to those wildly invasive connectivity features and half-baked (often counterproductive) advanced driving aids, but nobody is holding their breath.

Still, the semiconductor shortage is only going to get worse. What was previously dubbed a short-term problem has evolved into a harrowing industrial nightmare caused largely by our own stupidity. Had the industry decided to gradually ramp up automotive technology (perhaps after features had been more thoroughly tested), decided that pandemic-related lockdowns didn’t need to be quite so strict, or bothered to rely on something other than global just-in-time supply chains, the situation would be far less dire.

From Bloomberg:

A failure to secure critical supplies is a massive short-term setback — millions of vehicle sales will be lost this year — and is a bad sign for the future as competition from tech-savvy internet and consumer-electronics companies intensifies.

“This probably gets worse before it gets better,” said Stacy Rasgon, who covers the semiconductor industry for Sanford C. Bernstein. “It just takes a long time to bring this capacity online.”

NXP Semiconductor CEO Kurt Sievers said the shift to EVs is happening faster than anticipated, which has added to the increased demand for automotive chips. NXP plans to ship at least 20 percent more auto chips by revenue in the first half of 2021 compared with the first half of 2019, even though car production has dropped about 10 percent over the period, he said.

Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co., cautioned the crisis is far from over. His company, which is the world’s most advanced chipmaker and will be critical to any resolution, will begin to meet auto clients’ minimum requirements by June, but expects the car-chip shortages could last until early 2022, he said in an interview with CBS.

With electronics accounting for increasingly more of a vehicle’s sale price, your author has envisioned a world where car companies sell cheap, basic automobiles that forego a lot of the distracting bells and whistles that have become commonplace over the last decade. However, that would represent a complete about-face for an industry that’s become totally preoccupied with electrification and connectivity and be at odds with policies advanced by world governments.

The more realistic scenario is extended production lulls and rampant shortages extending beyond semiconductor chips. Auto suppliers are bending over backward to procure components and they’re just one of several industries doing the same. Meanwhile, the turnaround on orders placed continues to balloon with most firms lucky to see their chip deliveries arriving within four months. Current estimates have the shortage costing the automotive sector over three million units of vehicles by year’s end.

[Image: SunflowerMomma/Shutterstock]

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