Chip shortages could slow automotive production, VW and suppliers say

BEIJING/FRANKFURT/SAN FRANCISCO (Reuters) – A shortage of chips used in auto manufacturing could disrupt automotive production in China well into next year, industry officials said Friday, with chip companies saying they are raising prices and expanding their production in response.

Automobiles have become increasingly dependent on chips – many of them made in Europe – for everything from computer management of engines for better fuel economy to driver-assistance features such as emergency braking.

Automotive production slowed in early 2020 because of hard lockdowns caused by the COVID-19 pandemic but has come roaring back, especially in China, as consumers look to travel in private vehicles rather than take public transport.

German auto suppliers Continental, Bosch and Volkswagen, the world’s largest carmaker, warned about the shortage of semiconductor components.

“Although semiconductor manufacturers have already responded to the unexpected demand with capacity expansions, the required additional volumes will only be available in six to nine months,” Continental said on Friday. “Therefore, the potential delivery bottlenecks may last into 2021.”

Germany’s Infineon Technologies AG said it was increasing its investments to ramp up a new chip factory in Austria.

“We have already factored in certain growth for car production in 2021. Accordingly, we will adjust our global manufacturing capacities,” the company said in a statement.

Dutch automotive chip supplier NXP Semiconductors has told customers that it must raise prices on all products because it is facing a “significant increase” in materials costs and a “severe shortage” of chips, a letter to customers seen by Reuters showed. Read More

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