The Scarcity of Silicon chips which is the basic need of the automotive sector has been affecting the automakers to cut back on production globally. Due to this shortage the Ford automobile company, announced Thursday that it would reduce the output of its truck F-15, and General Motors also announced that it will suspend its work at three North American factories. Some of the factories were closed for two weeks in China, and in Germany, Volkswagen suspended production lines at two factories. According to the Estimation did by the Market research firm IHS market, the production of 672,000 vehicles has been delayed in the first quarter of 2021, mostly in China and Europe because of the shortage. In line with this, 70% production of advanced silicon chips is assured by the Taiwan Semiconductor Manufacturing Company (TSMC).
“The sharp slowdown in the global auto industry in the first quarter of 2020 resulted in putting suppliers on temporary standby and delaying planned investments to respond to demand,” said Claude Cham, who represents French auto parts suppliers. Chips are gaining strong traction across several industry verticals, particularly post the explosion of computer sales during the lockdown. This, in turn, has diverted the attention of chipmakers to other clients. The shortage is quickly having a major impact on automakers as they have extended their supply chains in recent decades and becomes increasingly dependent on just-in-time delivery of automotive parts. However, automakers are doing their best to handle the situation.
The chip shortage is being considered a wake-up call by European governments already worried about supply risks as China and the United States clashed over access to semiconductors for Huawei, according to Mathieu Duchatel at the Paris-based think tank Institute Montaigne. Thirteen European countries, including France and Germany, have since teamed up in the area, now considered essential to ensure Europe’s strategic independence from Asia and the United States. Europe currently accounts for only 10 percent of global semiconductor production.
