More car chips coming this year, but supply crisis to ‘run into 2022’

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utomakers should expect more semiconductors in the second half of the year, but the overall squeeze on supply is likely to continue into 2022, according to one of the industry’s largest suppliers, Infineon.

However, the Munich-headquartered company said it would only start to make up lost volume in 2022 and blamed supplier issues for not expanding chipmaking capacity fast enough.

“We predict that the imbalance between supply and demand will continue for a few quarters yet, with the risk that it lasts into 2022,” said Infineon chief executive Reinhard Ploss in a virtual press conference.

Most carmakers have been forced to pause production at some point this year due to a lack of semiconductors. The shortage was caused by soaring demand for silicon-powered consumer electronics during the pandemic, while automakers cancelled orders for parts due to slumping sales. When car orders picked up at the end of 2020, manufacturers found themselves at the back of the queue with chip suppliers.

Infineon marketing director Helmut Gassel said the chip shortage affected the production of around 2.5 million cars in the first quarter of 2021. Last week Ford said the shortage could cost the US automaker $2.5bn this year. Infineon, which earns 45% of its revenue from selling chips to carmakers, pointed to “bottlenecks” from the companies to which it outsources chip manufacturing.

Most chips are based on the designs of companies such as Infineon or Arm, but physically manufactured at foundries owned by other companies. Most of these are located in Taiwan, South Korea, the US and, to a lesser extent, China.

The global chip shortage was further compounded by a factory fire at Renesas in Japan – another key automotive chip supplier – and a cold snap closing the Samsung and Infineon laboratories in Austin, Texas earlier this year.