Automakers and chip companies differ on solution to shortages

Automakers including General Motors, Ford and Hyundai predict the nearly two-year-old chip supply constraint will ease in the second half of this year, but automotive microprocessor makers, on the other hand, expect the recovery to take longer.

Chip shortages cost the global auto industry $210 billion in revenue and lost production of 7.7 million vehicles in 2021, consultancy AlixPartners estimated in September.

The differing perspectives on the issue facing the auto industry prolong uncertainty over its recovery from the coronavirus pandemic and risk hampering its transition efforts to new chip-intensive technologies such as electrification and safety and assistant driving capabilities.

Tesla, which managed chip supply last year through strategies that included creating new software to deal with changes in chips, expects supply difficulties to last this year before easing into the next.

Qualcomm is optimistic. “I think a lot of our colleagues are prioritizing the auto business and delivering as much as possible,” Akash Palkhiwala, the company’s chief financial officer, told Reuters.

Infineon said on Thursday that the supply-demand balance for some chip models will improve from the second half of this year, but the market for older microprocessors — crucial for automakers — will remain tight.

“Supply limitations are far from over and will persist into 2022,” Infineon Chief Executive Reinhard Ploss said during an investor conference.

Ford has partnered with US chipmaker GlobalFoundries to reduce Taiwanese TSMC’s reliance on older technology chips.

“We learned the lesson very painfully that we cannot manage the supply chain for these important components as we have been doing,” said Ford Chief Executive Jim Farley.