Chip Shortage Will Slow German Car Production At Least Until 2024

The global shortage of semiconductors will limit car production in Germany “at least until 2024”. This is apparent from an analysis by the consultancy Alix Partners.

The analysis shows that it takes six months to order and deliver chips. That is still twice as long as normal.

Meanwhile, demand for chips in the sector continues to climb. The number of integrated circuits per car continues to rise due to increased digitization and electrification. The experts said this is even though semiconductor manufacturers are currently reluctant to invest in their production capacity, fearing a recession and rising interest rates.

In addition, there is competition with other sectors that need chips. For example, for semiconductor manufacturers, the automotive industry is “a small customer” with 6 to 10 percent of global capacity. In addition, margins on consumer electronics chips are up to 11 percentage points higher than those for the automotive industry.

Even if demand for chips for smartphones and game consoles fell, semiconductors would “remain the bottleneck of the auto industry,” the report said. Demand will continue to outpace supply in 2024, leading to rising prices for chips and, ultimately, more expensive cars.

The automotive industry is one of the most important sectors of the German economy, including the Volkswagen, BMW and Mercedes-Benz groups.

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