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[NEWS] Latest updates as semiconductor chip crisis cripples industry

Latest updates as semiconductor chip crisis cripples industry

jlr nightshift 536 0

Production halted for Skoda and Volkswagen, while other brands sign deals with electronics giants

After a difficult year where the automotive and technology industries have been hampered by a shortage of semiconductor chips, several manufacturers are still feeling the strain, with some having to close production lines earlier than originally planned.

The crisis looks likely to continue well into 2022, despite some, including Toyota, believing the worst was already over. Many firms have now moved to agree significant deals with large electronics manufacturers to ensure a consistent supply of semiconductors well into the future.  

The shortage of semiconductors initially stemmed from increased demand for personal computers, tablets and smartphones at the height of the Covid-19 pandemic, which largely diverted supply away from the automotive sector, and it now extends to Covid-related closures at semiconductor factories and international shipping ports.

Previously, Autocar reported that a number of manufacturers were urgently seeking to overhaul their components supply chains as a workaround to ensure continued production. Industry analysis company IHS Markit said at the time that the shortage could cut global production by nearly 700,000 vehicles year on year, although the final figure could be even higher.

For Autocar Business webinars and podcasts, visit BMW has signed a semiconductor supply deal with Inova Semiconductors and Global Foundries to secure a supply of “several million microchips per year”. It says the chips will be used for smart LED lighting technologies in the BMW iX and other upcoming cars. 

“We're deepening our partnership with suppliers at key points in the supplier network and synchronising our capacity planning directly with semiconductor manufacturers and developers,” said Andreas Wendt, BMW’s head of purchasing and supplier network. 

“This improves planning reliability and transparency around the volumes needed for everyone involved and secures our needs for the long term." 

BMW CEO Oliver Zipse, who is also the president of the ACEA, warned earlier this year that supply problems would continue and that “the gravity of the situation requires a strong and coordinated response across the European Union”.


Ford has been heavily impacted by the shortages throughout 2021, but CEO Jim Farley has suggested the firm will prioritise batteries over semiconductors to meet the 200,000-strong demand of the new F-150 Lightning electric pick-up truck.

Speaking to

Jaguar Land Rover

JLR is still warning of long waiting times for its new models. The firm issued a warning to leasing companies that the lead time for 53 model variants extends to over a year, with 2022-model-year Land Rover Defender, Land Rover Discovery, Land Rover Discovery Sport, Range Rover Evoque and Jaguar E-Pace models all impacted, reported Fleet News.

“Like other automotive manufacturers, we're currently experiencing some Covid-19 supply chain disruption, including the global availability of semiconductors, which is having an impact on our production schedules.  We continue to see strong customer demand for our range of vehicles,” JLR said in an earlier statement to Autocar. 

“We're working closely with affected suppliers to resolve the issues and minimise the impact on customer orders wherever possible."


Mercedes-Benz factory in Hungary has halted production for a month from Monday 13 December - earlier than its standard end-of-year maintenance period, reports Mercedes-Benz plant in Kecskemét will modify its production plans from calendar week 50,” Daimler said.

The factory is the largest industrial employer in the region and produced 160,000 cars last year. Production will resume from 12 January, and the 4700-strong workforce there will continue to be paid a base salary with benefits. The factory currently builds the A-Class, B-Class, CLA and CLA Shooting Brake.

The German firm previously reduced its optional equipment list on some models to minimise delays, Fleet News reported, “from late June production and until further notice”.

Electronic options such as a foot-operated boot release, wireless smartphone charging pads, audio devices and LED headlights will be removed on some models, impacting AMG Line models most significantly.

“Regardless of the model, we take into account how long a customer has been waiting for their vehicle and try to prioritise accordingly,” Mercedes said. “Nevertheless, handovers to customers are strongly dependent on the individual equipment and the short-term availability of parts.”


Nissan believes the automotive industry will be affected by shortages until mid-2022. 

"The pandemic has really disrupted the supply chain around the world and [the] automotive industry has been impacted much more than expected,” said Ashwani Gupta, the firm’s chief operating officer. “It will take some more time to get back to normal operations."

Nissan’s Sunderland plant in the UK has been feeling the impacts of the semiconductor shortage for six months, reported the Sunderland Echo.

“The global shortage of semiconductors has affected parts procurement in the auto sector,” a Nissan spokesman said. "Due to the shortage, Nissan is adjusting production and taking necessary actions to ensure recovery.”


Renault, which is an alliance with Nissan, has also predicted that supply shortages will last until mid-2022. The firm’s CEO, Luca de Meo, has said it will prioritise output of higher-margin vehicles. 

"Renault has been forced in some cases to send someone to Asia to get the chips," said de Meo, describing the situation as "a mess".


Stellantis has signed a deal with Taiwanese electronics firm Foxconn to design a new family of semiconductors to be implemented into the group’s four electric-vehicle platforms. Foxconn will provide more than 80% of Stellantis’s semiconductors. 

“Our software-defined transformation will be powered by great partners across industries and expertise,” said Stellantis CEO Carlos Tavares.

“With Foxconn, we aim to create four new families of chips that will cover over 80% of our semiconductor needs, helping to significantly modernise our components, reduce complexity and simplify the supply chain. This will also boost our ability to innovate faster and build products and services at a rapid pace.” 

The deal should allow Stellantis’s growth to continue. It became Europe’s best-selling manufacturer in November, overtaking the Volkswagen Group for the first time since its inception. It claimed a 21.0% market share, largely thanks to the success of the Peugeot 208 and Peugeot 2008. 

The deal with Foxconn will also involve research into reducing the complexity of semiconductors, which Stellantis believes will be important as vehicles become “increasingly software-defined”.


Toyota will continue to halt production at many of its Japanese factories as its component suppliers have been disrupted because of Covid-19. 

Production of the Land Cruiser SUV as well as several Lexus models will be impacted, with 14,000 vehicles expected to be lost. 

The stoppages were caused by a “lower attendance rate at suppliers in South East Asia due to the respread of Covid-19 and tight logistics situation in Japan,” Toyota said in a statement sent to the BBC. 

Toyota will stay committed to its production target of nine million vehicles, despite the shortages.

This marks the fourth time the firm has cut production in 2022. Six of its 28 factories were shut down in November, while production was slashed in August due to Covid-19 and a fire at one of its major facilities. 

"I think we're over the worst period," Toyota global procurement manager Kazunari Kumakura said back in November.

The firm hopes that between 850,000 and 900,000 vehicles will be produced for worldwide distribution, which is a 15% cutback from its target to produce one million vehicles this November.

Kumakura said Toyota would have hit the one-million mark had supply issues not been as impactful. 

"We're now co-ordinating both internally and externally with our suppliers to see how much we can make a recovery in December and beyond," he said. "We target a high production level for December and beyond, so we will try our best to make as many vehicles as possible."

Volkswagen Group

Skoda’s Christmas break will be extended until 10 January because of disruptions to parts deliveries, according to unions at the manufacturer. The firm was producing at between 75-80% capacity at the start of the month but operations will now halt.

Workers will take leave from 23 December. The extension will not count as a holiday, meaning workers will be compensated with 80% of their wages for the remaining period, Arteon and Passat are built at Emden, plus ID 4 production is expected to begin there next year. 

The equivalent of 70 working days will have been lost by the end of the year due to short-time working, a Volkswagen spokesman told Automobilwoche, with the cut in production described as “massive”. 

Seat will also cut production and close its Barcelona plant in Spain for five days in December, due to impacts caused by global supply disruption, Automotive News Europe reports. 

"The crisis of global semiconductors supply that affects all the automobile industry will force us to idle the Martorell plant on 17, 20, 21, 22 and 23 December," Seat said in a statement. 

The decision comes as demand for Seat and its Cupra performance brand have returned to pre-pandemic levels.


Volvo has claimed that its supply situation has improved with the announcement of its quarterly report last month. 

While supply was still lower than pre-pandemic levels, the Swedish manufacturer said that production had “improved month by month” since September. 

Speaking about the firm’s third quarter results, Volvo CEO Håkan Samuelsson said: “Production was approximately 50,000 cars lower in the quarter compared to the same period in 2020, while sales in the period fell by approximately 30,000 cars as the drop in production volumes was compensated by lowered inventory. 

"The supply situation has improved going into the fourth quarter, but we expect the industry wide shortage of semiconductors to remain a restraining factor."  


Analysis: chips are down for car makers as shortage continues​

Global chip shortage: Audi furloughs 10,000 staff as production slows​ (from January)

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