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CHIP SHORTAGE NEWS Global chip shortage 2022 - updates in July

From Luke James, Nicole Kareta Reading Time: 14 min |

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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 July 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. -

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):

Due to parts shortage: Toyota announces further production suspension adjustments

With numerous customers still waiting for vehicles to be delivered due to the parts shortage caused by COVID-19, automaker Toyota has apologized for the repeated adjustments to production schedules in an official press release issued July 27. At the same time, the company has announced that it will additionally halt production at some domestic plants. The reason for this was said to be problems with parts procurement from a supplier affected by heavy rain damage mainly in Aichi Prefecture.

The press release further states: "As it remains difficult to look ahead due to the shortage of semiconductors and the spread of COVID-19, there is a possibility that the production plan may be lower. However, we will examine the parts supply closely to minimize sudden decreases in production, and continue to make every effort possible to deliver as many vehicles to our customers at the earliest date."

Volvo thinks that the chip shortage is easing

Volvo Cars, which is one of Europe’s leading car manufacturers, says that it has got past the worst of a global chip shortage that has squeezed auto production globally. According to CEO Jim Rowan in a recent interview with CNBC, the company’s semiconductor inventory is now “back at full supply”.
“We had guided in the first quarter we were affected by one specific semiconductor which hampered production across most of our range,” Rowan added. “We had forecasted by and large we would be through that by the end of the second quarter, and that’s what we’ve seen. We are through those semiconductor issues.”

Volvo, which manufactures cars at the luxury end of the automotive sector, posted a mixed set of Q2 2022 results on Wednesday, July 20. According to these results, the automaker slumped in retail sales, with 143,006 units sold in the three months through to June, and a 2 percent drop in revenues to USD7 billion.

The chip shortage hits Detroit vehicle supplies

The global chip shortage, which has been called the worst crisis for automakers in 50 years by the Washington Post, has left dealerships in Detroit with little to sell as consumer prices continue to soar. Dealerships all over the city are reporting scarce inventories and rental counters at the city’s airport have run out of vehicles. All the while, buyers are facing months-long delays and record prices before they’re able to get their hands on new vehicles.

The root cause of this is, of course, the global shortage of chips that has caused automakers to slash their output. This in turn has caused shortages of new and used vehicles, and this is particularly problematic for Detroit, which is a historic car-making city. It may be the biggest disruption we’ve seen since the 1970s and the fuel crisis,” said Matt Anderson, a transportation historian at the Henry Ford Museum complex in Dearborn, when speaking to the Washington Post in a recent interview.

According to consulting firm AlixPartners, the automotive industry produced 8.2 million fewer vehicles last year than it would have if not for the chip shortage. The outlook for 2022 remains bleak, too, with automakers projected to sell just 14.4 million new cars in the United States, down from roughly 17 million in 2019.

Intel spends USD1.75 million on lobbying amid chip shortage

Intel, one of the world’s largest semiconductor companies, spent a record USD1.75 million on federal lobbying over the last three months as the chip industry continued its fight to secure billions of dollars in grants, subsidies, and other funding from the U.S. Congress.
Intel’s spending on lobbying increased 65 % from the roughly USD1 million the company spent in Q2 2021. The company’s previous high was USD1.43 million in the first quarter of this year. The semiconductor industry’s latest lobbying disclosures, which were released on Wednesday, July 20, show that the industry hit Washington with an enormous lobbying campaign. Together, the top chip companies spent a total of USD19.6 million during the first half of this year alone.

Lobbying on the critical piece of legislation, which is known as the CHIPS Act, has picked up since the beginning of 2021 as Senate Majority Leader Chuck Schumer hailed the USD52 billion infusion as the “centerpiece” of his ambitious legislative plan to counter China’s growing dominance in the semiconductor space.

Now piano maker Yamaha is weighing in on the chip shortage

The global semiconductor shortage has placed immense pressure on a wide range of industries, crippling everything from consumer electronics to automotive manufacturers. Now it’s weighing on the music industry, and one of its biggest companies has sent out a cautious note over the ongoing chip crunch.

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The Shizuoka-based company is known for its acoustic pianos, but the world's largest instrument maker already generates the majority of its sales with keyboards and other electronic musical instruments. It also has a growing audio equipment business, ranging from headphones and audio mixers to car speakers.

"The situation is improving, but there is still an imbalance between supply and demand," said Yamaha President Takuya Nakata in an interview after making an appearance on Nikkei CNBC television last week. "Shortages are still continuing. There were about 35 billion yen (USD253 million) in opportunity losses in the previous fiscal year. I think we could lose about 30 billion yen this fiscal year as well."

Nakata acknowledges that although the instrument business has been able to weather the shortage through design changes, doing so is more difficult for high-end audio equipment because they use components that are harder to replace. "Customers will be concerned with even a slight change in sound, so we need to be very careful," he said.

Nokia anticipates chip shortage easing as profit beats forecasts

Finnish telecom giant Nokia has said that it expects the global semiconductor to ease later this year, as it reported a quarterly operating profit that beat market expectations due to solid demand for 5G gear. The company’s performance reportedly boosted its shares by around 7 %.

"The overall direction in the semiconductor industry is positive at the moment, but we did continue to have constraints in the second quarter," Chief Executive Pekka Lundmark said in an interview. "Our order book would have enabled a faster growth had there been more components available.”

Supply chain disruptions due to renewed coronavirus restrictions in Asia and the ongoing conflict in Ukraine have also led to increased costs, eroding margins, and forcing companies to increase their prices. Demand for chips is expected to fall later this year as smartphone and PC sales begin to slow, increasing supplies to other industries.

U.S. Senate votes for scaled-back CHIPS Act

The United States Senate has voted in favor of a scaled-back version of the CHIPS Act, which is a legislative effort to pump billions of dollars into domestic semiconductor manufacturing amid a global chip shortage and the shrinking position of the U.S. in the global semiconductor market.

Last year, the Senate voted for a larger bill (USICA) that would have provided more than USD200 billion for technology and advanced manufacturing to counter both China and climate change, but this effort was blocked by Republican senators.

Although scaled back, the CHIPS Act will still provide around USD54 billion for U.S. semiconductors. Intel has pushed for the bill, delaying the ground breaking of its biggest fab until the bill is passed. IBM has also backed the bill, with vice chairman and former Trump official Gary Cohn saying that "every day that passes without this legislation is another day that leaves America dangerously dependent on limited foreign supplies of semiconductors."

Volkswagen and STMicro to design new automotive semiconductors

German automaker Volkswagen and STMicroelectronics, one of the world’s largest chipmakers, are reportedly working together to design new semiconductors for automobiles in an attempt to ease the chip shortage and safeguard long-term supply.
“With the planned direct cooperation with ST and TSMC, we are actively shaping our entire semiconductor supply chain,” said Murat Aksel, Volkswagen’s purchasing head in a recent press release. “We’re ensuring the production of the exact chips we need for our cars and securing the supply of critical microchips for years to come,” he added.

According to the International Business Times, the chips will be manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker. This new partnership isn’t the first time Volkswagen has partnered with chipmakers. The automaker’s software unit Cariad said in May it is seeking to source system-on-chips from Qualcomm for autonomous driving up to Level 4 standards, i.e., with little-to-no human intervention. Volkswagen has made it clear that its new partnership with STMicro is unrelated to its partnership with Qualcomm and that the two will not have an impact on one another.

TSMC estimates highest revenue growth in almost three years

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, has announced that its forecasts are indicating that the company’s revenue growth could be the largest it has reported in 10 quarters. The company said that it is “highly confident” about its long-term prospects and pointed to the high levels of demand for its high-tech chips used in data centers and electric vehicles.

This announcement comes only a few weeks after TSMC announced its bumper results for April-June 2022 period that highlighted resilient demand amid a chip crunch caused by pandemic-fueled sales of smartphones and laptops.
TSMC, whose clients include chip majors such as Qualcomm Inc, also signalled that demand was cooling from consumer electronics customers who would reduce chip stockpiles over the next few quarters into 2023.

"After two years of pandemic-driven stay-home demand, this type of adjustment is reasonable in our view," TSMC's Chief Executive Officer C. C. Wei told an online earnings briefing. He added that long-term demand for the company’s chips was “firmly in place” and that any upcoming down cycle would be nowhere near as big as in 2008.
"Despite ongoing inventory adjustment and macro uncertainties, the structural growth trajectory in the long-term semiconductor demand remains firm. We expect our capacity to remain tight and our business to be more resilient,” he added.

General Motors to manufacture its own family of microchips by 2025

In a recent interview with the Associated Press, General Motors (GM) CEO Mary Barra announced that the company will produce its own family of microchips by 2025 to help the company overcome potential future chip shortages and related challenges such as production delays. According to Barra, the ongoing chip shortage is expected to last well into 2023 and renewed coronavirus outbreaks in Asia are likely to further impact production. To fight this, GM will follow the likes of Tesla and develop its own microchips.

Barra says that GM will move toward three families of chips by 2025 that the automaker will buy and control itself. These chips will reportedly be able to perform a multitude of tasks, which means that GM could do away with the dozens of chips that it currently uses in its vehicles. The standardization of microchips will allow GM to buy them in huge quantities for use across its large portfolio of brands and models. “We’re also working with a select group of strategic companies to source these for the volumes,” said Barra in the interview. “We’ll have much better control and a stable supply.”

IDC analyst warns that chip supply will not increase immediately

The world has been struggling to fight off a major chip shortage for a while now, and as we’ve reported several times, it has severely impacted many industries including consumer electronics and automotive. Unfortunately, the shortage is far from over. At least, that is the warning of a senior analyst at the International Data Corporation (IDC) given in an interview with CNBC’s Squawk Box Asia on Tuesday, July 18th.

Speaking to CNBC, the IDC’s Asia-Pacific research director, Vinay Gupta, warned that the global chip shortage is not over yet, and the war in Ukraine is continuing to put a significant strain on supplies of important parts needed.
“The semiconductor supply is not going to increase immediately. There are a lot of raw materials, gases, which were required for production of those semiconductors,” Gupta was quoted as saying.

Pointing at supply chain issues due to the war in Ukraine, Gupta said that the two countries capture a large part of the market share, with both Russia and Ukraine being the largest exporters of krypton—a noble gas used during chip production.
Supply chain disruptions and rising costs will also mean “the average selling price of the devices is going to rise and the infrastructure vendors would be then passing it down to the customers,” Gupta added.

Bosch plans significant expansion of 300-millimeter chip production in Dresden

Bosch plans to invest in the construction of two new development centers – in Reutlingen and Dresden – at a combined cost of over 170 million euros. In addition, the company will spend 250 million euros over the coming year on the creation of an extra 3,000 square meters of clean-room space at its wafer fab in Dresden. “We’re gearing up for continued growth in demand for semiconductors – also for the benefit of our customers,” Dr. Stefan Hartung, chairman of the Bosch board of management said. “For us, these miniature components mean big business.”

This new investment in microelectronics also opens up new areas of innovation for Bosch. “Being a leader in innovation begins with the very smallest of electronic components: semiconductor chips,” Hartung said. New fields of innovation at Bosch include systems-on-a-chip, such as the radar sensors a vehicle uses to perform 360 degree scans of its surroundings during automated driving. Bosch will now be looking to enhance such components, making them smaller, smarter, and also cheaper to produce. The company is also working to further modify its own microelectromechanical systems (MEMS) specifically for the consumer goods industry. One of the things company researchers are currently using this technology to develop is a new projection module that is so tiny it can be built into the temple of a pair of smartglasses.

“In order to cement our leading market position in MEMS technology, we also plan to manufacture our MEMS sensors on 300-millimeter wafers,” Hartung said. “Production is scheduled to start in 2026. Our new wafer fab gives us the opportunity to scale production – an advantage we intend to exploit to the full.”

STMicroelectronics and GlobalFoundries: new 300mm manufacturing facility in France

STMicroelectronics and GlobalFoundries Inc. have announced they have signed a Memorandum of Understanding to create a new, jointly-operated 300mm semiconductor manufacturing facility adjacent to ST’s existing 300mm facility in Crolles, France. This facility is targeted to ramp at full capacity by 2026, with up to 620,000 300mm wafer per year production at full build-out (~42 % ST and ~58 % GF).

ST and GF are committed to building capacity for their European and global customer base. This new facility will support several technologies, in particular FD-SOI-based technologies, and will cover multiple variants. This includes GF’s market leading FDX technology and ST’s comprehensive technology roadmap down to 18nm, which are expected to remain in high demand for Automotive, IoT, and Mobile applications for the next few decades.

The new facility will strongly contribute to the objectives of the European Chips Act, including the goal of Europe reaching 20 % of worldwide semiconductor production by 2030.

UK new car sales reach lowest point since 1996

Sales of new cars in the UK fell by almost a quarter in June, marking the worst June since 1996 as the global chip shortage continues to affect the industry. This shortage continues to restrict the supply of critical components such as semiconductors and is exacerbated by COVID-19 restrictions in China. Together, these factors are significantly hampering the ability of manufacturers to keep up with demand for their vehicles, the Society of Motor Manufacturers and Traders (SMMT) said. In some cases, drivers are waiting more than a year to receive delivery of some models.

According to the SMMT, 140,958 new cars were registered in June, 24.3 % fewer than in June 2021. Large corporate fleets reported a 27.6 % drop in sales, while private consumer sales dropped by 21 %. In total this year, 802,079 new cars have been registered, down almost 12 % from June 2021, marking the second-weakest first-half performance in 30 years.

Jaguar Land Rover’s sales continue to struggle

British automotive giant Jaguar Land Rover (JLR) has said that its sales have continued to be constrained by the global chip shortage despite the company achieving record orders for vehicles.

JLR’s retail sales for Q2 2022 reached 78,825 vehicles, down by 183 units when compared to Q1 2022 and 46,000 units when compared to Q2 2021. Compared to Q1 2022, retails were higher in the UK, up 10 %. They were also up 49 % in Europe but down by 5 and 30 % in China and North America respectively.

JLR has posted wholesale volumes of 71,815 vehicles, which excludes its China joint venture, down 6 % from Q1 2022. The group continues to experience strong demand for its products, however, setting recent new records with global retail orders. As of June 30, JLR’s order book has grown by almost 200,000 units, up by around 32,000 orders since March 31.

General Motors completed almost 100,000 fewer cars in Q2

The global shortage of semiconductors meant that automotive giant General Motors completed 95,000 fewer vehicles last quarter, as all these vehicles were left without crucial components. The Detroit automaker said that most of the incomplete vehicles were built in June, and that it expects for most of them to be finished and sold to dealers before the end of the year.

The unsold vehicles amounted to 16 % of GM's total sales from April through June. The company said Friday that it sold more than 582,000 vehicles during the quarter, down more than 15 % from a year ago.

GM confirmed its full-year net income guidance of US$9.6 billion to US$11.2 billion with pre-tax earnings of US$12 billion to US$15 billion in recent regulatory filings. For the first time, the company predicted that it would make US$2.3 billion to US$2.6 billion before taxes in the second quarter, falling short of analyst estimates of US$3.97 billion.

In a statement, GM said its North American production has been relatively stable since the third quarter of last year, but short-term parts disruptions are continuing. “We are actively working with our suppliers to resolve issues as they arise to meet pent-up customer demand for our vehicles,” the statement said.

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