Why Was There a Severe Shortage of Automotive Chips in 2021?
2 Answers
Because the current demand for chips in automobile manufacturing is significantly higher than before. In the past, automotive chips were mainly used to control electronic devices in the car and the engine. However, modern vehicles now include various assisted driving functions, which has considerably increased the demand for chips. More related information is as follows: Introduction to Automotive Chips: Automotive chips primarily refer to controller and processor chips. The normal operation of a vehicle relies on the processing of data and information. Note: Every function in a car involves chips. With the increasing production of automobiles, the shortage of chips has become frequent, as each controller requires chips.
I've been in the automotive industry for over a decade, and the 2021 chip shortage was a massive pitfall. The pandemic threw global supply chains into chaos, with chip factories shutting down or reducing production, and transport trucks unable to clear customs. Meanwhile, demand skyrocketed because modern cars are packed with dozens of chips controlling headlights, air conditioning, safety systems, and more—electric vehicles and autonomous driving assistance systems are particularly chip-hungry. The most frustrating part was natural disasters, like the Taiwan earthquake that paralyzed key factories for months, making recovery impossible. Automakers also miscalculated inventory management, underestimating the recovery pace, which led to broken production chains. Many customers had to wait until the next year to get their cars, and repair parts were also in short supply. Overly centralized supply chains are a major issue—having multiple backups might ease the pain. But honestly, that lesson was a tough one to learn.
