Auto companies all over the world are upset, some closed the plant, others send employees on leave
Ford has shut down its Chennai-based plant in India for a week, and reports are now that the company has decided to close the Germany plant for a month. There is only one reason behind this – the lack of semiconductors. It is lacking all over the world. Because of this, car companies around the world are upset. They are forced to reduce production, which leads to increased waiting on cars.
Ford says that by February 19, the plant in Saarlouis, Germany has been closed. It employs around 5,000 employees. “We are monitoring the situation,” the company said. In Europe, employees, suppliers, customers and dealers are rescheduling production to minimize the impact. But how did the semiconductor suddenly become so deficient?
Semiconductors spending on gadgets and electronics: Worldwide car sales declined due to the lockdown, but the demand for gadgets increased significantly. Major semiconductor manufacturers started supplying smartphones, laptops, gaming consoles and other equipment companies. However, now they are also supplying to auto companies, but this is much less than the requirement of car companies. A car has 50 to 150 chips. It depends on the features of the car.
Companies around the world are struggling with chip shortages: Due to the lack of semiconductors, production at Audi’s Germany and Mexico plant has come down. It has briefly given away 10,000 employees. Fiat Chrysler has temporarily shut down plants in Mexico. Nissan, Honda and Hyundai are adjusting their production according to the semiconductor supply. General Motors and Reno have said that they are trying to minimize the impact. BMW’s production has not stopped, but the company is in constant contact with suppliers.
The worst condition in China: According to a data firm, production in Europe, North America, Japan and India will be affected throughout the quarter. But the biggest problem may be in China. According to reports, China will have 2.5 lakh fewer vehicles in the first quarter.
Taiwan Semiconductor Manufacturing Company (TSMC), a major supplier of chips, said last week that it was in talks with auto companies to resolve the crisis.
According to a report, the semiconductor industry grew at a rate of 5.8% annually between 2016 and 2022. It is expected that by 2022, the automotive semiconductor market will be worth $48.78 billion, or about 3.56 lakh crore rupees.
Why semiconductor companies are not able to increase production
These companies are producing at full capacity, but most of their supplies are being sent for gadgets. Just as auto companies are under pressure, semiconductor manufacturers are also under pressure. Demand is high, so semiconductor manufacturers are not able to increase supply abruptly.
