Automotive Industry Confronted with Computer Chip Shortage

Due to the sluggish sales of the automotive industry over the past year, car manufacturers and supply chain partners have been underproducing products while the pandemic was in full swing. The recent development of the COVID19 vaccine has caused the industry to spring back to life, but skyrocketing demand in 2021 causing massive shortages for computer hardware that many “connected” cars require.

Cars in 2021 are far more advanced than cars were even a few years ago, with some premium models requiring over 3,000 computer chips for a single vehicle. The pandemic caused the majority of drivers and potential customers to stay home, which dampened the demand for cars in 2020. Since the country is beginning to open back up, the demand for cars is high again, but chip manufacturers are struggling to meet order deadlines.

In fact, Ford Motors shut down a factory in Kentucky this week due to the storage. Audi also has similar problems, announcing the company will be making 10,000 fewer vehicles this quarter, and is furloughing 10,000 employees. Leading chip makers such as Taiwan Semiconductor Manufacturing Co.(TSMC) have been unable to secure capacity since demand started increasing at the end of 2020.

This manufacturing crisis has caused a bit of a problematic relationship between the automotive and computer chip industry. The pandemic has created a surge in consumer electronic demand, and car manufacturers claim that companies like TSMC are compromising orders in favor of electronics. Consumers have now come to expect cars that are, as CCS Insight analyst Geoff Blaber stated to BBC, “computers on wheels”. So as the world begins to approach the end of the pandemic, the automotive industry has a genuine reason to be concerned about this computer chip shortage.