The global semiconductor shortage that has gripped the automotive sector and
many other industries since 2020 is likely to last for several years in older technology
nodes. Structural supply and demand imbalances, as well as a fundamental supply
chain mismatch, were the root causes of the crisis, but it was triggered and amplified
by Covid-19 and other external shocks. Unfortunately, the growing number of such
disruptions, driven by climate change, geopolitical tensions and black swan events,
make future supply crunches ever more likely. So, what can the automotive industry
do to address the current crisis and protect against a future one?
The implications for the traditional industry are clear – its cars are heavily reliant
on older, legacy semiconductors. But investments in building capacity for these
devices are low, hitting future production and increasing the industry’s exposure
to the shortage. The cars produced by new OEMs, on the other hand, use more
advanced architectures often built on new, leading-edge nodes. These chips are
receiving the lion’s share of capacity investment, giving the companies that use
them an advantage, which also extends to their sourcing of older semiconductors.
The crisis has led many players to rethink semiconductor supply chains. New models
to secure long-term demand and share risk reflect a rebalancing of negotiating
power. Consequently, automotive OEMs and suppliers must not wait for the crisis to
end: they need to be proactive in implementing a set of strategic measures instead.



December, 21th 2021