The shortage of global semiconductor supply makes the automobile manufacturing industry face great risks.
Recently, German auto company Volkswagen Group, parts giant continental group and Bosch group have issued a warning one after another that the global shortage of auto chips may affect auto production. This includes the Chinese market, where demand is growing as a result of market recovery, and the impact will continue until next year.
The shortage of chip supply has threatened the security of the global automotive industry supply chain. China’s auto industry was the first to feel the tension, and some auto companies have been forced to stop production because of “core shortage”. FAW Volkswagen and SAIC Volkswagen, two of China’s top selling auto companies, were the first to report that production was affected. 21st century business reporter learned from different sources such as automobile enterprises, parts enterprises and people in the automobile industry that due to the shortage of core parts such as electronic components, including automobile chips, some factories and individual models of FAW Volkswagen and SAIC Volkswagen have adjusted their production plans, reduced production shifts or suspended production in a short time.
The uncertainty brought by COVID-19 has affected the chip supply of some specific automotive electronic components. And the overall recovery of the Chinese market has further promoted the growth of demand, making the situation more severe, leading to the risk of interruption of some automobile production. ” Volkswagen’s response from China is candid about the huge challenge brought by the shortage of auto chips.
It’s not just the north and the south that are affected. “The whole automobile industry has been affected, not only by Volkswagen, but also by Geely and two Honda (Dongfeng Honda and GAC Honda). We have received the notice of the impact of the suspension of production.” On December 6, a senior executive of a multinational auto parts company in China told 21st century business reporter.
21st century business reporter learned from many auto enterprises that although the situation of each enterprise is different, “core deficiency” is a common problem faced by the whole industry. Starting from December, the shortage of auto chips will become more prominent, which will affect all auto companies in varying degrees, and even affect the production scheduling plans of some auto companies in the first half of next year.
Although a number of car companies said that the current car delivery and sales have not been affected. However, in the short term, it is difficult to solve the problem of shortage of automobile “chips”. The rising trend of domestic automobile market brings increased demand. Now it is the peak season of sales. The huge potential threat brought by the contradiction between supply and demand has brought huge pressure to the whole automobile industry.
Why car companies lack core?
“All kinds of system parts (all in short supply), including engine ECU, steering EPS and chassis ESP, are not only chips, but also various electronic components.” Senior executives of the above auto parts enterprises told the 21st century economic report.
In short, the direct cause of OEM production interruption is the shortage of some core automotive electronics. The engine control system (ECU) and body electronic stability control system (EPS) are mainly provided by Tier1 (the first tier supplier) to automobile enterprises, among which Bosch and Mainland China occupy the most important market share. The chips needed in ECU and ESP are purchased by Tier1 from semiconductor chip suppliers.
A person in the automobile industry told the reporter that the main shortage of automobile chips is the function chip MCU (micro control unit), which is widely used in the electronic core components of traditional fuel vehicles. According to the data released by strategy analytics, in 2019, more than 2.5 billion vehicle mounted MCU will be installed in the world.
A number of industry insiders told the 21st century business reporter that the shortage of auto chips is caused by two factors: on the one hand, China’s auto industry continues to recover, the market performance is better than expected, and the growth of demand for auto chips is higher than expected; on the other hand, the global epidemic is spreading, the upstream wafer factories are facing a tight production capacity, and the chip supply of mobile phones, computers and other electronic consumer goods is increasing The production capacity of automobile chips is also limited.
“When it comes to chips, we are all very sensitive, thinking of geopolitics and national strategy. But in fact, it is the problem of capacity planning and market forecast, mainly the problem of OEM and Tier1. ” Some people in the automobile industry told reporters of the 21st century economic report. The impact is global, but the performance of China’s automobile market is excellent, the demand has increased significantly but the supply is insufficient, and the problem has been exposed for the first time.
In the first half of this year, affected by the epidemic situation, the industry’s expectations for both the automotive industry and the semiconductor industry were not optimistic. The pessimistic forecast in the first half of the year, to a certain extent, inhibited the production scheduling plan for automobile chip production capacity in the second half of the year.
“The cycle of automobile chips is long, and the production capacity is not well planned. In normal years, there may be this problem, but we just didn’t pay attention to it. On the other hand, if the planning is not good, there will be pressure on the warehouse and scrap, so it is a double-edged sword. ” The senior management of the above multinational auto parts enterprises in China told reporters.
It is worth noting that China’s auto market has continued to recover since May. Although the market sentiment was pessimistic in the first quarter, the whole industry had obviously felt the gradual release of auto market demand in the second and third quarters. In this process, with the growth of China’s demand and the gradual recovery of other markets, there is a local shortage of auto parts.
According to the senior management of some parts enterprises, if we follow the original capacity planning of automobile manufacturers, the supply of chips is not a big problem. However, due to the new production capacity, we need to place additional orders with semiconductor companies, which takes a long period of 6-9 months.
However, it is worth noting that the automobile needs a long product development and verification cycle, and so does the automobile chip. Moreover, because Tier1 has a strong voice, it is very difficult for auto companies to adjust the supplier system. Taking the body control EPS as an example, it has complex structure, multiple integrated functions and relatively expensive price, so the R & D cycle and test cycle are the longest. Once the pre batch supply of chips is not available, it will bring trouble to the normal production.
“Although the supply chain of automobile industry is extremely complex, automobile enterprises have experienced market feedback mechanism and strong supply chain risk control ability for many years. The shortage of chips certainly did not break all of a sudden. There must have been a process in the middle. Car companies and Tier1 should have found some problems and adjusted the pace of production. ” In December and June, Cui Dongshu, Secretary General of the all China Federation of riders, said in an interview with the reporter of the 21st century economic report.
In fact, companies are not without warning about the shortage of car chips. “In fact, the purchasing department is very sensitive to the relationship between supply and demand. Some enterprises have been aware of this in August and September.” Some auto enterprise insiders told the 21st century economic report that some enterprises had begun to increase their inventory consciously before.
Industry insiders told reporters that in the case of a general shortage of auto chips, auto companies have to adjust the production plans of some models and factories, so as to minimize the losses. For example, a source told reporters that FAW Volkswagen Tianjin and Chengdu factories were more affected than the other three factories.
“Auto companies are quick to judge the market. Therefore, they will invest the scarce resources in the models that bring higher economic benefits according to the market demand.” People from auto companies told the 21st century economic report.
The shortage may last more than half a year
In an interview with the 21st Century Business Herald, many people in the industry said that the impact of the shortage of automobile chips on automobile production and the reasons behind it are well known, but it is very difficult to solve the problem.
“To solve this problem, OEM needs more accurate market forecast, Tier1 needs better capacity planning, and tier2 needs to shorten the lead time as much as possible.” Some people in the auto industry said.
In this process, all parties need to cooperate, and Tier1, represented by Bosch and Mainland China, plays a key role.
Although both the mainland and Bosch have indicated that they are strengthening cooperation and communication with semiconductor manufacturers and making every effort to minimize the impact. However, a number of Tier1 enterprises told reporters that the problem of insufficient capacity of chip factories is difficult to solve in the short term, and the shortage of chips in the industry will last for at least half a year.
The more urgent question is how to stop the situation from deteriorating. At this stage, the delivery of most auto companies has not been affected. If the shortage of production capacity can not be solved, the production capacity of some models can not meet the market demand, it is only a matter of time.
A senior member of Bosch China, in an interview with a reporter of the 21st century economic report, was slightly helpless. “The capacity of the chip factory is insufficient, and we have nothing to do. We can only increase investment to help chip factories invest and expand production capacity, but it may take a few months. “
“We have always been in close communication with semiconductor manufacturers. At present, semiconductor chip manufacturers have begun to expand production capacity to cope with the sudden increase in supply and demand. However, considering the normal delivery time of the semiconductor industry, the current supply shortage will be improved in 6-9 months. Therefore, the supply situation is expected to remain severe by 2021. ” On December 6, relevant people in China of continental group told reporters of 21st century economic report.
In addition, some people in the automotive industry told reporters that due to the shortage of production capacity of upstream fabs, automotive chips are in a state of competing for production capacity with mobile phones and other consumer electronics.
“The manufacturing process requirements of automobile chips are not as high as that of mobile phones. Compared with mobile phones and 5g, the profit margin of chip enterprises is not so high. So when the global capacity of wafer factories is tight, cars and consumer electronics compete for chip capacity and do not occupy an advantage. ” On December 7, an auto chip employee told 21st century business reporter.
In addition, it is worth noting that in the field of investment in automotive chips, with the growth of the scale of intelligent networking and new energy vehicles, many chip enterprises have put more attention on the fields of IGBT, sensors, etc., which are full of great commercial prospects.
Many people in the industry expressed concern about the price of automobile chips in an interview with the 21st century economic report reporter. Under the current situation of serious imbalance between supply and demand, the price rise of automobile chips will be a high probability event.
The top five suppliers of global vehicle MCU are NXP, Infineon, Renesas electronics, STMicroelectronics and Texas Instruments, which occupy half of the market. Among them, there have been news of price increase from several enterprises.
Recently, it is reported that a customer has received a notice from NXP. NXP said that in response to the “substantial increase” in material costs and the “serious shortage” of chips, the company had to raise the prices of all products to solve the unforeseen cost increase brought by suppliers.
Renesas electronics, a Japanese semiconductor manufacturer, also sent a price increase notice to its customers, saying that the company has to raise its price to ensure the continuous input and production of these products due to the pressure of inventory, cost increase and product transportation risks. The price adjustment of Renesas will take effect on January 1, 2021.
In the case of chip shortage affecting automobile production capacity, OEM and Tier1 have to accept the rising price. Cui Dongshu believes that in the current situation of extremely fierce competition in the automobile market, it is difficult to pass on the price of this kind of cost to consumers, the possibility of automobile price rising is not high, and the increased cost may need to be digested by the main engine manufacturers and parts suppliers themselves.
Will it affect the automobile terminal market?
The shortage of chips has had a real impact on the production capacity of some auto companies. For auto companies, the end of the year and before the Spring Festival is the traditional peak season for auto sales, and the market of China’s auto market has been improving recently. If the capacity of some models can not keep up at this time, it will not only bring a certain degree of economic losses, but also give up the market share to competitors.
Of course, on the whole, the shortage of chips is a challenge for the whole auto industry, and different auto companies will face challenges more or less.
“The shutdown will affect the market terminal, depending on the time span of the impact.” On December 7, Zheng Fu, Roland Berger’s global senior partner and vice president of Greater China, said in an interview with the 21st century business reporter.
Senior automotive electronics engineer Zhu Yulong believes that the problem of (chip) shortage is more likely to start in December 2020 and extend to the first half of 2021, where there will be delivery bottlenecks. This kind of influence may have different degrees of influence on all automobile enterprises, and it is difficult to keep up with the production scheduling according to the demand.
However, Cui Dongshu believes that the impact of production decline is limited, and the car market is not as pessimistic as expected. “Many car companies still have some models in stock. Auto companies can reduce the impact by adjusting their production plans. At the same time, they can also reduce part of their inventory. “
He believes that from the perspective of the trend of the car market, China’s passenger car market is expected to grow by 7% next year, and there is still demand in the market. On the supply side, although some models of some auto companies will be affected, consumers still have other auto brands to choose from.
“Although the production capacity of some car models of some car companies will cause a gap, it does not mean that all cars are not produced, and the impact is limited. Consumers can choose similar models from other car companies. ” Cui Dongshu said.
In addition, in the past two years, China’s auto market has entered a period of adjustment, and the competition between auto companies has been very fierce, and the price war has been intensifying. Therefore, in the mainstream joint venture or independent brand market, even if the supply of some models of some auto companies is insufficient in the short term, there will not be a significant increase in the terminal price. Otherwise, consumers will be robbed by competitors.
“The shortage of chips will not have a big impact on the end consumer market. Demand determines supply, and we expect the production and sales volume of China’s auto market to achieve positive growth next year. ” Cui Dongshu told reporters.