Semiconductor crisis and no end in sight: It’s getting worse and worse

In the past year, the semiconductor crisis was much less noticeable due to the corona pandemic, because the economy had shut down and adjusted its production. This year, despite the ongoing pandemic, things look much worse, because more is being produced and accordingly more is in demand. But the production of semiconductors is nowhere near keeping up. In response, the analysts at Global Data have revised the forecasts for real economic growth downwards by 0.14 percentage points for Germany, 0.23 percentage points for Japan, 0.45 percentage points for the US and 0.25 percentage points for China. “It is not surprising that Germany, Japan, the USA and China, as major vehicle manufacturers, have felt the economic effects of the chip shortage,” explains Gargi Rao, economic research analyst at Global Data, “vehicle sales stalled as early as August 2021 and inventories are expected to continue to tighten in the coming months. “

According to Global Data, the sales market for passenger cars and light commercial vehicles fell by an average of 26 percent in both Western Europe and North America in September. In the US, where real growth forecasts have been revised down the most, vehicle sales fell nearly 25 percent in September, followed by the UK with a loss of 34.9 percent. In Germany, things hardly looked better, as vehicle sales fell by more than 22 percent in August. The situation was similar with a decline of 17.3 percent in annual sales in the USA and China also lost 10.5 percent. The decline was much less noticeable in Japan, where there was a small minus of 2.26 percent. However, they are expected to decline even further in the coming months – largely due to Toyota’s 40 percent production cut, which will further widen the gap between supply and demand.

“We’re seeing vehicle manufacturers’ production plans continue to be disrupted in the fourth quarter due to chip shortages,” says David Leggett, automotive analyst at Global Data. “Long lead times for expanding semiconductor manufacturing capabilities mean there is no quick fix to supply bottlenecks In fact, the supply problems for the auto industry are likely to persist in early 2022, even if the bottlenecks at some companies gradually ease. ” The missing microchips are by no means only noticeable in the automotive industry. Gargi Rao: “The shortage of microchips and other industrial components is hindering the economic recovery in 2021 – and forcing companies and policymakers in the automotive industry to reassess their supply chains. The need of the hour is to reduce dependence on a handful of Asians and US suppliers. The shortage is not just affecting the automotive sector. Companies that manufacture consumer electronics are also badly affected. In the short term, retailers could pass the rising costs on to their customers, which could dampen demand. “

In addition, the ongoing closings in many countries in the Asia-Pacific region have permanently disrupted global supply chains in the electronics and solar industries. The increasing demand for solar energy and the rising silicon prices since June 2021 have adversely affected the production facilities in the region. The analysts at Global Data expect silicon prices to remain roughly at the current level for the rest of the year and can only be mitigated by increasing production. However, the chip crisis is not consistently disadvantageous for car manufacturers. David Leggett: “The chip shortage is kind of a double-edged sword. Not only does it raise transaction prices for vehicles sold in the short term, it also forces companies to seriously review their supply chains for transparency and risk mitigation strategies – a positive aspect for longer periods View.”