Chip Shortage In Germany To Last Years, Warns Audi Head

A senior official in the German car industry has offered a sobering reality check for people thinking the semiconductor shortage has ended.

Reuters quoted a senior Audi manager as saying on Friday that semiconductor shortages that have created bottlenecks for Germany’s car industry, will take years to resolve.

And this warning comes despite various chip-makers including TSMC and Intel pledging to build local fabs in Germany.

German factories

Just this week TSMC said it would invest 3.5 billion euros (£3bn or $3.8bn) in a factory in Dresden, capital of the eastern state of Saxony in Germany, alongside a number of other industrial partners.

TSMC said the fab in Dresden marks a “significant step towards construction of a 300mm fab to support the future capacity needs of the fast-growing automotive and industrial sectors, with the final investment decision pending confirmation of the level of public funding for this project.”

The German government meanwhile will contribute up to 5 billion euros (£4.3 billion or $5.5bn) to the factory in Dresden.

According to the Reuters report, German automakers and electronics producers are still feeling the effects of manufacturing delays, caused by a global shortfall of chips.

Executives and policymakers are re-thinking supply lines and trying to reduce reliance on a handful of Asian and US chip suppliers.

“It takes years, after all. It’s about billions of dollars are being invested,” Renate Vachenauer, head of procurement at Volkswagen-owned Audi, was quoted as saying by Augsburger Allgemeine newspaper.

Vachenauer said carmakers could ease the bottlenecks by reducing the varieties of chips used from the 8,000 different types in vehicles today.

“We have to use many levers to stabilise the supply of semiconductors and also stock up on the broker market to some extent,” she added.

Chip shortages

The car industry was hit hard by the global chip shortages during the Covid-19 pandemic, coupled with the supply chain disruption from Russia’s illegal war against Ukraine.

For example in April 2022 BMW chief executive Oliver Zipse had warned chip supply improvements will only arrive next year (i.e. in 2023).

As the world is now 8 months into 2023, and the world has left lockdowns, factory shutdowns and the pandemic firmly behind it, there is the perception that chip shortage problems are no longer an issue.

But not it seems for car manufacturers, as cars require a surprisingly large amount of chips, as they are used in everything from brake sensors, to power steering, to entertainment systems.

It should be remembered that the computer chips found in cars, vans and lorries are not considered leading edge or sophisticated.

Indeed, often these automotive chips are typically fairly old, and therefore proven and robust.

The average vehicle or car is said to require between 1,500 and 3,000 of these older chips.