Why is there a shortage of automotive chips?
2 Answers
The shortage of automotive chips is mainly attributed to three factors: technological evolution, insufficient production capacity, and supply-demand imbalance. Since the COVID-19 pandemic swept across the globe, the economies and production capabilities of major countries have been severely impacted. The global production of automotive chips is predominantly concentrated in Europe and America, regions that were heavily affected by the pandemic, leading to a natural shortage in the supply of automotive chips. Additionally, technological evolution and supply-demand imbalance also contribute to the shortage. Technological Evolution: Currently, global chip foundries are primarily focusing on 12-inch wafers, which has restricted the production capacity of 8-inch wafers. Automotive chips do not require high dimensional specifications, making 8-inch wafers ideal for their production. Insufficient Production Capacity: The automotive chip market is dominated by European and American manufacturers. During the pandemic, the production capacity of these manufacturers was severely affected, leading to tight supply of automotive chips. Supply-Demand Imbalance: The chip industry is characterized by a very typical cyclical nature. Therefore, during the pandemic when global automotive sales were sluggish, manufacturers of automotive chips were hesitant to expand production. However, they did not anticipate the rapid recovery of the Chinese market, which led to a significant increase in chip demand, resulting in a supply-demand imbalance in the market.
As a technician with years of experience in the automotive industry, I've personally witnessed the troubles caused by the automotive chip shortage, and the root causes are actually quite complex. During the COVID-19 pandemic, chip factories worldwide experienced large-scale shutdowns, directly reducing production capacity by over 30%, and recovery has been painfully slow. At the same time, automotive demand surged, and with the rise of electrification, the number of chips required per vehicle jumped from dozens to hundreds—especially for full self-driving features like those in Teslas, which are particularly chip-hungry. Supply chain issues further exacerbated the situation: global shipping was in chaos, containers were stuck at ports, and even minor incidents like factory fires disrupted production. I've seen customers face delays of up to six months for new car deliveries, with features like automatic braking unavailable. Factories couldn't keep up with orders, investments weren't timely, and overall supply chain coordination proved too fragile to recover quickly.
