Ongoing chip shortage for German car industry, predicts Audi

The German automotive and electronics sectors have faced significant setbacks due to production delays resulting from a worldwide chip shortage. Industry leaders and policymakers are now reconsidering supply chains and striving to lessen dependence on a small number of Asian and American 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 suggested that automakers could alleviate the bottlenecks by streamlining the range of chips employed, moving away from the current diversity of 8,000 distinct chip types found in vehicles.

"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.

Berlin has been actively enticing major contract chip manufacturers with substantial subsidies in the billions of euros. Notably, companies like Intel from the United States and TSMC from Taiwan have revealed their intentions to construct manufacturing facilities in Germany this year.

This announcement also comes hot off the back of US President, Joe Biden, having signed the CHIPS Act, which set aside more than $52 billion to boost semiconductor chip manufacturing. So far, one year later, there has been a $166 billion investment in semiconductors and electronics with around $230 billion committed to bringing chip production back to the USA.

Dunstan Power, Managing Director of Versinetic, said: “Whilst acknowledging the challenges the German car industry faces due to semiconductor shortages, I remain optimistic. We are steadily emerging from this shortage, with lead times returning to customary levels, reflecting the global supply chain's resilience.

“There are also proactive measures being taken globally to address the situation, which are promising. The establishment of additional fabrication plants in Europe and North America is a significant step forward. The recent announcement by US President Joe Biden of a substantial $166 billion investment in semiconductor plant projects further emphasises the global commitment to strengthening the semiconductor supply chain.

“Although some German car industry analysts express concerns over component availability, I am confident that through combined industry efforts and adaptability, we will navigate these challenges. The suggestions by Ms. Vachenauer, such as reducing chip varieties, further indicate potential avenues for stabilisation.

“I am encouraged by the ongoing developments and believe in our collective ability to drive the industry towards a brighter future."