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CHIP SHORTAGE NEWS Global chip shortage 2022 – updates in April

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The chip shortage continues in 2022. While some experts believe that the situation will improve this year, others are convinced that the crisis will persist into 2023. This article is updated continuously and summarizes the most important chip shortage news in April 2022.

The global chip shortage emerged in 2020 and is an ongoing problem where the demand for integrated circuits such as computer chips is greater than supply.
The global chip shortage emerged in 2020 and is an ongoing problem where the demand for integrated circuits such as computer chips is greater than supply.
(Source: Quardia Inc. - stock.adobe.com)

How are companies responding to the chip shortage and what are policymakers commenting? Here we sum up the most important events related to the global shortage of microchips (this article is updated continuously):

Skip to chip shortage news in February

Intel CEO: Chip shortage to ‘drift’ into 2024

Six months ago, Intel CEO Pat Gelsinger said that the global chip shortage would last until at least 2023. Now, he says it might be 2024 before we start to see a return to normality.

“We believe the overall semiconductor shortage will now drift into 2024, from our earlier estimates in 2023, just because the shortages have now hit equipment and some of those factory ramps will be more challenged,” he recently said in an interview with CNBC.

While this sounds like terrible news, it is important to remember that when he says the shortage will last until 2024, he is talking about the chip industry’s ability to meet demand for new products, not just existing ones. “We expect the industry will continue to see challenges until at least 2024 in areas like foundry capacity and tool availability as an IDM,” he added.

Intel is one of many chipmaking giants ramping up investments in infrastructure, by building new fabs in Arizona, Ohio, and Germany. However, current timelines estimate that these will not come online until well into 2024 — when the shortage will, hopefully, be over for the most part.

Ford has lost US$3.1 billion due to chip shortage

Ford Motor Company said that it has lost US$3.1 billion over the past three months in a report dated April 27, largely due to the ongoing semiconductor shortage that has limited the number of SUVs and pickup trucks available for sale in North America, but also because of the company’s huge investment in EV start-up Rivian.

Ford CFO John Lawler was eager to stress that the company made US$2.3 billion in pre-tax profit, however. "Clearly the demand for our new products is very strong," Lawler said. "We continue to have issues with supply of chips, which constrained us, and in particular here in North America, it hit us disproportionately on our large vehicles."

The ongoing chip shortage has forced Ford and General Motors to close many of its North American factories for weeks at a time over the course of the last year. This has caused huge shortages of its vehicles, including a 9 percent drop in the number of vehicles sold in Q1 2022 when compared to the same time a year earlier.

UK car production reports weakest March figures since 2009

UK car production fell by 33 percent in March, making it the worst March for production figures since the financial crisis in 2009. The Society of Motor Manufacturers and Traders (SMMT) said that only 76,900 cars were produced, compared with 115,498 produced in March 2021. The SMMT attributes this fall to a decrease in production for overseas markets.

The automotive industry has been hit hard by soaring metal and energy prices, pandemic-led supply chain issues, and the ongoing shortage of semiconductor chips. Russia’s invasion of Ukraine has also left automakers looking for alternative supplies of important parts, including electrical wiring, aluminum, and nickel.

These challenges meant that in total, 100,000 fewer cars were manufactured in the first quarter when compared to the same time last year. "Recovery has not yet begun and with a backdrop of an increasingly difficult economic environment, including escalating energy costs, urgent action is needed to protect the competitiveness of UK manufacturing," said SMMT CEO Mike Hawes.

Mercedes-Benz inventor high in Q2 amid chip shortage

German automaker Mercedes-Benz has said that it expects its vehicle inventories to remain high in the second quarter of 2022 as supply chain bottlenecks continue to hinder production and deliveries.

"There is quite a high number of blocked vehicles - a part of that will be turned around but there will be new ones coming," CFO Harald Wilhelm said on an analysts’ call on April 27, after the carmaker reported first quarter results.

Although the automaker’s high pricing strategy is partly based on product scarcity, the company admits that it could have sold more vehicles in the first quarter without cutting prices. “It’s a shame as the semiconductor situation puts a constraint,” Wilhelm added.

Roughly half of the 1 billion euros reported by Mercedes-Benz in the first quarter were due to increases in the price of raw materials, with the rest split between energy and logistics costs, and the inefficiencies of stopping and starting production lines in response to supply chain issues.

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Chip shortage causes Volkswagen to remove features from several models

It was recently reported that Audi is removing popular features from some of its models to keep vehicle production moving amid the ongoing microchip shortage. Now, Audi’s parent company Volkswagen is also stripping features from some of its most popular vehicle models to help safeguard inventories.

The automaker is reportedly set to remove features from lower- and mid-trim versions of its Atlas, Tiguan, and popular Golf GTI and Golf R models while retaining them in high-end and top-of-the-line models of the same. This approach is the opposite of Audi, which is removing features including Invidia tire pressure display, wireless charging pads, and integrated toll modules across the board from certain vehicle models.

Volkswagen’s decision to cut features will see the Harman Kardon sound systems axed from some Golf GTI (SE and Autobahn) models and the hands-free liftgate from some Golf Tiguan (SE and SE R-Line Black) models.

Honda to cut production at Japan plants

Honda is planning to cut production by as much as 50 percent on two lines in early May at one of its Japan facilities as the automaker quotes the ongoing chip shortage and COVID-19 lockdowns as the cause.

Production will be cut at the automaker’s Suzuka plant, where it produces the Fit and N series mini-vehicles, as well as components for Honda’s overseas factories spread out across 27 nations. Meanwhile, production at a factory in Saitama prefecture that was reduced by a third in April April will be restored to normal operations, the company said.

This isn’t the first time that Honda has had to pause its production lines. In March, the automaker reduces production at two other plants by 10 percent through t the end of the month. At the time, Honda again pointed towards the chip shortage and geopolitical uncertainty.

Rivian CEO warns of an issue greater than the chip shortage

RJ Scaringe, the CEO of Rivian, has warned that the automotive industry could face a challenge that will dwarf the ongoing chip shortage. He has described the current shortage as a “small appetizer” in comparison to the potential damage that a shortage of EV batteries, and the metals needed to make them, could cause.

As reported in the publication Manufacturing Business Technology, Scaringe said, “All the world’s cell production combined represents well under 10 % of what we will need in 10 years,” adding that his projection would mean that as much as 95 percent of the supply chain needed currently does not exist.

To secure battery cells, Scaringe said Rivian plans to diversify its suppliers and build capacity to create its own. According to a recent report by the Center for Automotive Research (CAR), battery cell production will not meet demand until 2030.

Tesla CEO Elon Musk has also gone on record to warn about a future scarcity of battery supplies, tweeting that Tesla might have to get into the mining and refining directly at scale unless costs improve.

TSMC raises revenue forecast despite chip shortage

Taiwan Semiconductor Manufacturing Co. (TSMC) has raised its revenue forecast as demand for high-end processors has helped the world’s largest contract chipmaker remain unscathed by the ongoing chip shortage, new lockdowns in China, and Russia’s invasion of Ukraine.
Revenue from high-end processors accounts for a huge chunk of TSMC’s revenue, and for the first time it represents a larger chunk of revenue than smartphone chip sales. This demonstrates the growing demands of cloud service providers like Google, Microsoft, and Amazon and the decreasing reliance on Apple.

On Thursday, April 14, the chipmaker forecast a 37 % increase in revenue to USD18.2 billion for Q2 compared with the same period last year. This comes after TSMC beat its previous guidance and analysts’ expectations to post earnings of USD6.9 billion in Q1, up 45 percent year on year. TSMC says that growth could exceed 30 % for the entire year.

The success of TSMC is in stark contrast to the situation in other parts of the world, which is currently being hit by the chip shortage, renewed coronavirus lockdowns, and war.

Ford says that its new F-150 EV could make or break the company

Ford executive chairman and great-grandson of Henry Ford, William C. Ford Jr., says that the performance of the company’s upcoming Lightning F-150 EV could make or break the company. “If this launch doesn’t go well, we can tarnish the entire franchise,” Ford recently told the New York Times.

It’s widely known that Ford is struggling to keep up with the likes of Tesla and General Motors when it comes to EV production, and the company is relying massively on the F-150 to make some headway. Ford says that it already has 200,000 reservations for the EV, which is scheduled to start production from April 25.

Ford CEO Jim Farley is just as serious about the need for the F-150 EV to be a success, who is hopeful that the truck’s speed will be able to hit 60 mph in just four seconds. He also hopes that the USD40,000 price tag will help it stand out from more expensive competitors like Tesla.

Rather than build an EV from scratch, Ford opted to alter its existing F-150 model. This is risky given that the truck needs to be heavily modified to fit the large and heavy battery pack that’s required to power it. Ford is now “betting the company” on an EV future, said William C. Ford Jr.

In March, it was announced that Ford was to be split into two divisions. The first, Ford Blue, will continue developing gas-powered engines while the second, Ford Model E, will develop EVs.

BMW CEO says chip shortage will last into next year

BMW Group CEO Oliver Zipse has said in an interview that the semiconductor shortage is likely to last into next year.
Giving his comments during an interview with newspaper Neue Zuercher Zeitung, he said, "We are still in the height of the chip shortage," Zipse was quoted as saying. "I expect us to start seeing improvements at the latest next year, but we will still have to deal with a fundamental shortage in 2023."

This latest estimate comes just a month after BMW said during its annual press briefing that it expected the chip shortage to last throughout 2022. Zipse’s estimates echo those of Volkswagen’s CFO Arno Antlitz, who expects that chipmakers will not be able to meet existing demand until 2024.

Russia-Ukraine war could lead to greater chip shortage

The war in Ukraine threatens to worsen the existing shortage of semiconductor chips. Of particular concern is the ongoing siege in Mariupol, as three of the world’s largest neon companies are based in or near to the area. Neon, which is one of seven noble gases, is needed to operate the highly precise lasers that chipmakers use to turn silicon into microscopic circuits. Chipmakers generally don’t produce their own neon, and a shortage of the gas could worsen the already unstable situation.

According to Dusin Carmack, research fellow for cybersecurity, intelligence and emerging technologies at the Heritage Foundation, it could be three to six months before a major impact is seen. “But if this is an extended war, this is going to cause supply chain issues,” he said in an interview with FOX Business.
"In the near-term, I think smaller semiconductor fabs, or those who didn’t have the capability to diversify their stock, can see some immediate impact, especially if they relied on [Ukraine] for their supplies," Carmack said, highlighting that some companies moved to diversify after the 2014 invasion of Crimea.

Fraunhofer to continue funding of High Performance Center for three more years

The economic consequences of the ongoing chip shortage have highlighted the importance of microelectronics. To safeguard our future, achieving sovereignty in microelectronics R&D has become a huge goal for European leaders.
Now, Fraunhofer has confirmed that it will continue to fund its High Performance Center for Micro and Nanoelectronics for another three years. The additional funding of EUR1 million from the Fraunhofer Society between 2022 and 2024 is designed to help Europe establish technological sovereignty in microelectronics.

According to a press release, the High Performance Center will be evaluated continuously and, if the evaluation result is positive, follow-up funding will be provided for a next three-year period.
"The High Performance Center Micro/Nano has established itself as a valuable partner for industry and is systematically transfering new research results to innovative product development and applications," says Prof. Dr. Hubert Lakner, the coordinator of the High Performance Center Micro/Nano.

VW now expects chip shortage to last until 2024

Volkswagen Group has said that it expects the ongoing semiconductor shortage to continue longer than expected. According to Arno Antlitz, Volkswagen’s finance chief, supplies of semiconductors will not stabilize until 2024, by which time there will be a massive undersupply.

In an interview with Boersen-Zeitung, Antlitz said that he expects the situation to ease this year and next year, but the shortage will continue into 2024 because chipmakers won’t be able to meet growing demand.
"We see a structural undersupply in 2022, which is only likely to ease somewhat in the third or fourth quarter," he said. "The situation should improve in 2023, but the structural problem will not yet have been fully resolved."

This opinion has been echoed by other industry leaders, including the CEO of BMW Group, Oliver Zipse. "We are still in the height of the chip shortage," Zipse was quoted as saying in an interview with newspaper Neue Zuercher Zeitung. "I expect us to start seeing improvements at the latest next year, but we will still have to deal with a fundamental shortage in 2023."

Intel, Micron, and Analog Devices Join MITRE Engenuity’s Semiconductor Alliance

To define principles to accelerate semiconductor research, development, and prototyping to build a more resilient U.S. semiconductor industry, foster advanced manufacturing in the United States, and protect intellectual property amid increased global competition., Intel, Micron, and Analog Devices have joint the MITRE Engenuity’s Semiconductor Alliance.
The Semiconductor Alliance was developed from working groups in 2021 and is led by MITRE Engenuity. The Alliance calls the whole nation to action for a fair and objective National Semiconductor Technology Center (NSTC).

Ann Kelleher, PhD, executive vice president and general manager of Technology Development at Intel Corporation said: "The semiconductor industry in the U.S. is at an inflection point. There has never been a more important time to come together as an industry to establish the path forward to advance the foundation of innovation that will help solve the nation’s biggest challenges. The Semiconductor Alliance is an open collaboration that will leverage current and future R&D investments by industry and government throughout the U.S. and will support the spirit of the CHIPS for America Act to re-establish American industry leadership."

The worldwide semiconductor market is further expected to grow in 2022

According to a press release from WSTS (World Semiconductor Trade Statistics), global semiconductor market sales were US$ 556 billion in 2021 - an increase of 26.2 % from 2020. This reflects significant growth across all major product categories.
The largest growth contributors were the Analog category with 33.1 %, followed by Memory with 30.9 % and Logic with 30.8 %. Sensors and Discrete Semiconductors showed a growth rate in the range of 28 %. Growth was somewhat lower in the Micro category, at 15.1 % and Optoelectronics, at 7.4 %.

In 2021, America’s region showed a very strong 27.4 % growth, Europe showed a market increase of 27.3 % and APAC of 26.5 %, while Japan showed a below-average growth rate at 19.8 %.

The worldwide semiconductor market is expected to increase by 10.4 % in 2022 which corresponds to sales of US$ 613.5 billion. The strongest growth is expected for Americas (16.4 %), while lower growth rates are expected in Europe (10.8 %), Japan (9.7 %) and APAC (8.3 %).

Wait times for chips grew again in March

The wait times for semiconductor deliveries grew again in March to reach a new high. The increase comes after new lockdowns in China and an earthquake in Japan further crippled already fragile supply chains.

According to research by Susquehanna Financial Group, lead times — the amount of time between when a chip is first ordered and when it is delivered — increased by two days to 26.6 weeks in March.

Lead times increased for most chip types, including microcontrollers and memory. The war in Ukraine, COVID-19 lockdowns in China, and an earthquake in China will all have a short-term impact on Q1 2022 but “may have lingering effects on the severely constrained supply chain throughout the year,” analyst Chris Rolland said.

While chip customers are once again facing long waits, lead times are growing at a much slower rate than in 2021 when many industries — automotive in particular — were forced to shut down production lines due to a lack of the critical component.

White House calls the chip shortage an ‘emergency’

The White House has warned that the United States economy could be at extreme risk due to the semiconductor shortage, which has significantly affected U.S. manufacturing since the start of the pandemic. At the beginning of this year, it was reported that some companies were down to less than five days’ worth of inventory, a near-90% drop from 40 days in 2019.

According to the White House National Economic Council Director Brian Deese, the lack of semiconductors “probably took a full percentage point off GDP in 2021.” He also said that there is an “urgent need to invest in made-in-America semiconductors as well as research and development that will protect our economic and national security." Chipmakers including Intel and Samsung have said that they will begin building new U.S. chip plants in response.

Recent analysis by the U.S. Department of Commerce has said that there is “no quick fix in the face of emergency” and that even major investments in U.S. chip production “will not be sufficient to mitigate the risks associated with the current U.S. supply chain vulnerabilities.”

Chip industry rebound at risk as equipment delays grow

Chipmakers are working hard to expand production capacity and rebound from the crippling shortage that has left many industries struggling. Unfortunately, many are finding that their plans for expanding production are being stifled by long waits for key equipment, as an unprecedented parts shortage and supply constraints have hit the chip tools industry.

Leading equipment manufacturers, including Applied Materials and ASML, are warning their customers that they will have to wait up to 18 months for some of their critical machines, blaming shortages in everything from lenses and valves to engineering plastics and microcontrollers.

Meanwhile, demand for chip machines is rocketing. TSMC, Intel, and Samsung Electronics all have major new plants that are scheduled to come online, some as early as next year, yet there are worries that long lead times may cause delays.

"Last month a component supplier told me their lead time is about six months. Last week they told me it would be eight months, and this week it has become 10 months," said a manager at a top U.S. chip equipment maker in an interview with Nikkei Asia. "I'm feeling numb hearing this prolonged lead time. I'm squeezed between our chipmaking clients and my component suppliers, and it's really painful."

New car sales in UK fall to lowest level since 1998

New car sales in the UK fell to their lowest level since 1998 last month as the global chip shortage continues to batter output. Registrations of new vehicles fell to 243,479, which represents a 14 % reduction when compared to March 2021. This is according to the Society of Motor Manufacturers and Traders (SMMT), which called the sales “massively disappointing” for the automotive industry.

Chip shortages have forced automakers around the world to cut their production output several times since issues first surfaced over a year ago, which has left consumers waiting for up to a year for new vehicle models. The shortage, which is expected to continue into next year, has also caused problems for the second-hand market where prices for used models has in some cases risen above the price for new ones.

UK vehicle marketplace Auto Trader estimates that one in five used cars that are under a year old are being sold for more than their newer counterparts. Please use the sharing tools found via the share button at the top or side of articles. SMMT boss Mike Hawes said: “While demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers.”

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