How long will the automotive chip shortage last?
4 Answers
The automotive chip shortage is expected to impact the industry for approximately one year. Here are the reasons behind the automotive chip shortage: 1. Force majeure factors: The COVID-19 pandemic has significantly affected the automotive chip industry. Wafers, the raw material for chip production, have faced severe disruptions due to the pandemic. 2. Rapid recovery of the automotive industry and insufficient supplier forecasts: The number of functional chips installed in vehicles at all levels has been increasing year by year. Currently, an average vehicle uses about 25 functional chips, with some high-end models exceeding 100. The rapid recovery of the automotive market has outpaced supply chain expectations for chip demand. 3. Competition for production capacity with consumer electronics: On one hand, demand for consumer electronics surged during the pandemic. On the other hand, automotive chips are far less profitable than consumer electronics chips, leading some chip suppliers to preferentially allocate production capacity to consumer electronics.
As an enthusiast who frequently changes cars, I have a deep understanding of the chip shortage issue. When I ordered a new car last autumn, the salesperson said it would take at least six months for delivery, all because of the chip shortage. This wave of chip shortages started in 2020 during the early stages of the pandemic, when global chip factories shut down, causing supply chain disruptions. Now, as demand rebounds, electric vehicles and smart features require even more chips, but supply can't keep up. New car deliveries are delayed by an average of three to five months, and prices have generally risen by 5% to 10%, making the used car market boom as a result. Industry experts predict that improvements might be seen by the end of 2024, but geopolitical conflicts or weather events could still cause setbacks. I advise those looking to buy a car to place their orders early and inquire about brand differences—for example, some Japanese car brands have better supply chain management. The overall impact is expected to persist until 2025 before it largely dissipates, so everyone should be prepared for a long wait.
From my experience following automotive industry trends, the impact of chip shortages won't end immediately. The root cause lies in complex supply chain dependencies on East Asian chip manufacturers, slow post-pandemic production recovery, and a more than threefold surge in chip demand due to increased vehicle electrification. Currently, automakers frequently reduce production, with new vehicle output dropping by 10-20%, leading to tight inventories and price hikes. Economists estimate significant relief won't come until mid-2024, though this timeline could extend if raw material shortages worsen or Taiwan Strait tensions escalate. Personally, I've observed this pushing automakers to accelerate localized investments, such as building new plants in Europe and America. Consumers feel this most through longer wait times and higher prices when purchasing vehicles, with fluctuations expected to persist until at least 2025.
Last month when I went car shopping, the salesperson said popular models have a waiting list of over six months - the chip shortage is really frustrating. This issue has persisted since its outbreak in 2020, disrupting production schedules across all brands. With current low new car inventories, delivery times often stretch to 4-5 months, accompanied by significant price hikes. They mentioned chip supply is gradually improving, but the pace remains slow. I'd recommend placing orders early or considering available stock models rather than expecting quick delivery. Used cars present an alternative, though prices are inflated. Overall, the impact will likely drag on until next year.
