Chips shortage "real storm" - JLR chief - Just Auto
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Chips shortage “real storm” – JLR chief

By Simon Warburton 06 Jul 2021

Huge global demand for chips is causing difficulties for manufacturers.

JLR says the shortage affecting the semiconductor industry is creating a “real storm” as suppliers battle to keep up with huge demand.

Several stars are aligning to create surging need for chips, such as industry starting to recover from the COVID-19 pandemic, resulting in a global shortage of semiconductors for automakers and electronics makers, causing delays.

Another factor driving shortages stems from global lockdowns instituted by governments in a bid to fight coronavirus, as vast numbers of people are both working from home on laptops or using gaming consoles.

“It is a real storm for the industry, no doubt [about] that,” said JLR chief executive, Thierry Bolloré at the recent SMMT International Automotive Summit in London. “We could mitigate shortages which were already on the market since the beginning of the crisis, which was the beginning of this year especially. You could see our excellent results of the last fiscal year, thanks to that mitigation.

“However, a certain number of accidents occurred in Japan with some suppliers and also in Texas and all that together has created an even stronger storm and we are affected. For me it is going to last because we have learned – because we are not in direct contact with our microprocessor suppliers – it’s our Tier 1s who are in contact with them today.

“We have learned the difference of clock speed of this industry compared to our industry. They need to have long-term commitments in terms of ordering to make sure the capacities are available for what you need. These types of things were not really taken into account, for sure not by us, because we were not facing them directly, but not even by our Tier 1s, so to restructure and reorganise the supply chain to make sure we are on par with these microprocessor suppliers, it is going to take a bit of time, but that’s the situation we need to take.

“More broadly, I would see from my standpoint the OEMs, the car industry, with some very limited number of exceptions, have not considered the car is so much of the next connected object, IoT to a certain extent and as such needs to be very much interested by the microprocessor industry very directly.”

Automakers should expect more chips in the second half of the year, but the overall squeeze on supply is likely to continue into 2022, according to one of the industry’s largest suppliers, Infineon, in comments made in May this year.

However, the Munich-headquartered company said it would only start to make up lost volume in 2022 and blamed supplier issues for not expanding chip-making capacity fast enough.