The onset of the Covid-19 pandemic caused a perfect storm for the automotive industry. At its peak, restrictions to control the virus halted production at 90% of vehicle and component factories in China, North America and Europe4. Alongside showroom closures, European registrations almost halved during the first six months of the year5.
In turn, carmakers heavily reduced purchasing of semiconductors, just as demand surged for home computing, gaming and healthcare products. When semiconductor manufacturers restarted at reduced production, the limited volume available had already been prioritised elsewhere6, leading to supply constraints as automotive markets picked up in the third quarter of the year7. Demand for semiconductor-reliant technology is increasing, but supply is struggling to keep up.
Exacerbating the issue, only five semiconductor manufacturers supply the automotive industry and two of them – NXP8 and Infineon Technologies9 – had to suspend production at their facilities in Texas during winter storms in February. There are no quick fixes, either – the SIA claims up to a 26-week lead time for semiconductor factories to deliver the orders to customers10.