Looking back at the automotive industry in 2021, the chip shortage problem can be said to run through the whole year, and it has also become one of the important factors affecting automobile production in 2021: the automobile market situation in the first quarter of 2021 is relatively stable; the chip shortage in the second quarter began to affect the supply of automobiles; the chip problem reached its peak in the third quarter, and the production capacity of many automobile manufacturers around the world was affected; by the fourth quarter, the chip shortage problem was alleviated to a certain extent, and the supply of automobiles tended to be stable.
In the second half of last year, the lack of cores had the most obvious impact on the automotive industry, which not only led to the reduction of automobile production and price increases, delayed delivery, but also caused factory production to stop production in severe cases. We can find that the lack of cores affects not only one region, but also the scope of the world; automakers, regardless of size, are more or less affected. In 2021, many of Tesla's models have increased prices many times due to the shortage of chips affecting production capacity; in October last year, Hyundai Motor, Kia, South Korea's General Motors, Renault Samsung, and SsangYong Motors' five major vehicle manufacturers in South Korea all experienced a decline in local sales in the same month, and have shown a downward trend for eight consecutive months; many Japanese car companies have also cut production significantly.
Previously, the China Automobile Dealers Association estimated that car sales in 2021 will be about 25.8 million units, which is basically the same as in 2020, and passenger car sales will be about 21 million units, compared with 20 million units last year, a slight increase of only 5%. From this data, we can see the impact of the shortage of automotive chips on the industry.
2021 has passed, what will be the direction of automotive chips in 2022? Will there continue to be a state of short supply?
Chips or "sought-after goods" in 2022?
Although the automotive industry in 2021 is not very prosperous, there are views in the industry that with the slow easing of supply chain problems, for the automotive industry, 2022 may be more lively than 2021, the industry can maintain a certain speed of steady recovery, some analysts expect global car sales will grow at a rate of 4% to 6% to make up for the loss of sales during the disruption in 2021.
Although the industry expects the market situation to be more optimistic, chips are still the "main play", and many people believe that the shortage of automotive chips will continue to disrupt the normal order of the market during 2022 and continue until 2023. At present, at the beginning of the new year, East Asia has entered the off-season for car purchases because of the Spring Festival, and with the end of the Christmas holiday in Europe and the United States, the shortage of car chips will improve, but the new crown epidemic may still lead to new supply interruptions, resulting in chip production cuts.
And in the context of reducing carbon emissions, the global automotive market is accelerating the electrification of automobiles, and electric vehicles have become the priority choice of automakers. The European Union has put forward the goal of transforming electric vehicles in 2035, and major automakers have also set corresponding goals, many large manufacturers have targeted only the production of electric vehicles in the next 10-20 years, and in the case of the same production of a car, the chip consumption of electric vehicles is greater. In the long run, electric vehicles consume about twice as much chips as traditional internal combustion engine cars, which also exacerbates the shortage of car chips.
In addition, in addition to the demand only increasing, the production capacity has also made the chip become a "fragrant food" for major manufacturers to compete. Expanding production or building new factories is not something that can be done in a short period of time, usually takes two to three years, and the speed at which chip production capacity adapts to changes in demand has been slow. Previously, TSMC announced in 2021 that it would launch a production facility in Texas, but the plant would not be operational until 2024; Samsung Electronics had previously announced that it would build a $17 billion chip manufacturing plant in the United States, and it was also expected to start production until later in 2024. From this we can also understand the difficulties of increasing the supply of chips. From the above aspects, chips are still "sought-after goods" this year.
What should I do if I don't have a "core"?
So, after the automotive industry has experienced a chip shortage in 2021, will it repeat the same mistakes in 2022? I believe that the answer must be "no". At present, the continuous improvement of chip supply is certain, but it is too early to solve the comprehensive solution, and there is a "experience and lesson" of the previous year, and presumably major automakers will certainly not sit still.
For chip companies, since the outbreak of the epidemic, the capacity utilization rate has been more than 90%, some fabs are close to 100%, and even individual production lines through high-intensity overtime production, capacity utilization rate of more than 100%, in the short term, semiconductor manufacturers can try to squeeze more production from existing facilities, but in the long run, this aspect of the increase is not feasible. In terms of chip inventory, the semiconductor industry is a cyclical industry, and since chips have been in short supply in 2021, they cannot hope for inventory.
At present, the most practical way to deal with it is to expand the production line, although the average time required to build a new wafer production line or purchase equipment to expand the capacity is 2-3 years and 1-1.5 years, but after completion, it will greatly increase production capacity and alleviate the huge demand of the market. Of course, in addition to expanding production capacity, technological innovation is also very important, and new technologies can promote the development of the industry.
In general, only when enterprises of all parties strengthen their technical strength, promote benign communication between supply and demand sides, establish long-term cooperative relations, and create a good industry environment, can they better solve the problem of lack of cores. At present, a number of automakers have begun to establish partnerships with various suppliers, among which Ford Is building partnerships with GlobalFoundries to ensure future supply. While the eventual supply may still depend on a handful of large manufacturers, the establishment of partnerships will still make the process of ordering chips much easier.
In addition, Hyundai motor has previously said that it will invest a sum of money to start producing its own chips, clearly targeting the automotive industry. Automakers such as Nissan say they will adjust their designs to use different types of chips and consider producing chips independently.
Write at the end
Although the chip shortage in 2021 continues to affect the entire automotive industry, it is not a simple bad thing for the entire automotive industry. Automakers who have experienced 2021 will not easily feel confused when dealing with the chip shortage problem, and will deal with 2022 through their previous experience. However, 2022 has only just begun, how will the chip industry develop throughout the year? Will it cause headaches for automakers again? We don't know yet, but when we're fully prepared to deal with it, we don't have to worry too much and wait for time to give an answer.