Chip shortage brings an avalanche of funds for new capacity

But at the same time, analog chips from China are likely to come faster, Dziczek said. Analog chips, which control the mechanical systems in a vehicle, are a technology that “a lot of companies aren’t investing in,” she said. And many buyers are dependent on suppliers in China, where trade tensions with the US remain high.

“The geographic distribution of where the chips are being made is somewhat of an issue,” Dziczek said.

Also of concern: the new prospect of a slowdown, which could impact automakers’ microchip sourcing plans.

The slowdown could ease the problem, at least temporarily, by reducing demand for new vehicles and making it easier to meet unfulfilled demand.

But Dziczek believes that even in the face of a recession, demand for vehicles from the retail and fleet markets will continue to put pressure on chip producers.

In any event, Burkey cautions automakers to recognize that the slowdown-related reduction in demand will only be a transitory situation and that they should not back down from efforts to improve supply-chain transparency.

“The concern is if people start thinking, ‘Okay, hopefully the chip shortage will end faster than I think, so I don’t need to take any measures on my long-term commitments because all my problems are gone. Solve yourself,’ he said.

Instead, he advised, “Assume any softening in consumer demand is a short-term event and demand will bounce back. Otherwise we risk being back in early 2021, caught off guard and trailing on supply.” Huh.”

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