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CHIP SHORTAGE NEWS Global chip shortage 2022 – updates in March

Updated on 24.05.2022 From Luke James

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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 March 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.
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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):

Intel investment to bring cutting-edge technology to Europe

Intel has announced the first phase of its latest plans to invest as much as EUR80 billion in the European Union over the course of the next decade. Investments will be made across the full semiconductor manufacture value chain, from research and development to manufacturing and packaging technologies.

The chipmaking giant says that it will make an initial investment of EUR17 billion into a leading-edge semiconductor manufacturing mega-site in Germany, a new research and development hub in France, and manufacturing and foundry services in countries including Ireland, Poland, and Spain.

With this major investment, Intel says that it plans to bring its most advanced, cutting-edge technology to Europe and create a “next-generation European chip ecosystem”, something which will no doubt address the needs for a more balanced European supply chain — which is something that the EU is drastically trying to achieve.

Chipmakers face two-year shortage of critical components, ASML CEO says

The ambitious multibillion-dollar expansion plans of chipmakers are likely to be set back by a shortage of critical equipment over the next two years, says Peter Wennink, the CEO of ASML, which is a global specialist in manufacturing lithography machines used to make semiconductors.

“Next year and the year after there will be shortages,” Wennink said. “We’re going to ship more machines this year than last year and . . . more machines next year than this year. But it will not be enough if we look at the demand curve. We really need to step up our capacity significantly more than 50 %. That will take time.”

ASML’s lithography machines are used to engrave circuits into silicon wafers. It is one of the most critical processes in the entire semiconductor supply chain. Wennink says that ASML is assessing with its suppliers how capacity can be increased. At this moment in time, however, he says that it is not yet clear how big of an investment will be required.

Ford to ship cars with missing features due to chip shortage

Ford, like all automakers, is facing a crisis. On the one hand, there is no shortage of car dealers who desperately need new vehicles to sell. On the other, there are parking lots filled to the brim with nearly-finished vehicles that are lacking the computer chips needed before they can be shipped. Things have gotten so bad that Ford has decided to just go ahead and ship some of its vehicles as is, unfinished, with a promise to install the missing features “at a later date” free of charge.

The move from Ford comes as car dealers are growing desperate with lots that are almost empty. Dealers simply need cars to sell, and Ford has plenty of near-finished cars sitting around doing nothing in the Midwest — they’re just missing chips for non-safety-critical systems.
In a recent dealer meeting in Las Vegas, Ford said that it planned to begin shipping some of these vehicles. “We are offering ways for our customers to get their vehicles sooner during the global semiconductor shortage,” Ford spokesperson Said Deep said in a statement. No timeline has yet been given for when these vehicles will ship, however.

It’s moves like this that show just how much of an impact the chip shortage is still having nearly two years on from its inception.

Japan chip production unaffected by earthquake

Last week, a magnitude 7.3 earthquake off the Coast of Miyagi hit Japan, leading to widespread power outages. Almost immediately, market research company TrendForce conducted an initial analysis to see whether Japan’s domestic chip production would be affected, as a huge chunk of the country’s north-eastern area is a major production center for semiconductor raw materials.

According to TrendForce, the company’s preliminary assessment suggests that semiconductor is “currently unaffected”, with only one manufacturer in the main quake zone – Kioxia, which is in Kitakami – facing the having to revise its Q1 2022 production figures because of the disaster.

“Some of the remaining memory or semiconductor companies in the region are conducting machine inspections but the overall impact has been muted,” notes TrendForce’s press release dated March 17.

S&P cuts 5 million cars off 2022 and 2023 projections

S&P Global Mobility, one of the world’s foremost auto industry forecasters, has cut more than 2.6 million cars off each of its 2022 and 2023 projections for global production, a total of just over 5 million. S&P Global Mobility, formerly known as IHS Market, cites the ongoing conflict between Russia and Ukraine for the revised numbers. The forecasting giant now expects automotive companies to produce 81.6 million cars worldwide this year and 88.5 million next year.

“The downside risk is enormous,” Mark Fulthorpe, S&P Global Mobility’s executive director for global production forecasting, said in a statement Wednesday. In S&P’s worst-case forecast, production will fall by as many as 4 million vehicles below its earlier projections for both years.

The conflict in Ukraine is significantly affecting the prices of energy and raw materials alongside widespread expectations that the semiconductor shortage will continue for quite some time and until at least late 2022. Suppliers may also have issues in sourcing neon gas used for chipmaking from Ukraine, as well as palladium from Russia, which is a base element used in the production of catalytic converters.

Toyota makes more production cuts due to chip shortage

Toyota is set to make further production cuts this month due to the ongoing semiconductor shortage. The announcement comes just days after the Japanese automaker cut its domestic production target by 20 % for Q2 2022. Toyota said that it will be suspending production on one line at a factory for eight weekdays beginning March 22 through to the end of the month. This is in addition to the suspension of domestic production at two factories, a move which was announced last month.

The cuts will result in the production of around 14,000 Noah and Voxy minivans being directly affected, a spokesperson for Toyota said. It was only the week before when Toyota said that it will be lowering production for three months beginning in April to ease the strain on suppliers. The news also follows Toyota’s announcement that it will be pausing production at its joint venture plant with FAW Group in Changchun, China, due to new COVID-19 restrictions. Despite the cuts, Toyota will maintain its 8.5 million vehicle production targets for the year, a Toyota spokesperson said.

SIA calls for more investments in domestic semiconductor technology

The Semiconductor Industry Association recently met with President Joe Biden at the White House to discuss the importance of strengthening U.S. semiconductor manufacturing, research, and supply chains. The meeting included the President, state governors, and several senior executives from across the semiconductor industry and others that rely heavily on chips.

“We applaud today’s White House meeting between President Biden, governors, and industry leaders, and we echo their unified call for swift government action to strengthen America’s semiconductor capabilities, U.S. manufacturing, and our supply chains. Semiconductors are foundational to the U.S. economy and to a range of manufacturing sectors in America,” the SIA said in a press release.

The SIA says that reinforcing U.S. semiconductor production and innovation will help to secure America’s supply chain for chip-dependent products, boost the country’s overall manufacturing footprint, and create hundreds of thousands of jobs. The share of semiconductor manufacturing in the U.S. has decreased from 37 % in 1990 to just 12 % today. This drop is largely contributed to manufacturing incentives offered by other countries, placing the U.S. at a competitive disadvantage in attracting new manufacturing facilities.

“It’s time to fund the semiconductor manufacturing and research provisions in the CHIPS Act and enact a version of the FABS Act that includes an investment tax credit for semiconductor manufacturing and design. Getting these initiatives across the goal line will strengthen U.S. leadership in this foundational technology and help America avert future chip shortages.”

BMW’s full-year profit margin surged as it prioritized higher-profit models

BMW said on Thursday that its revenue and net profit hit all-time highs in 2021 despite increased spending on R&D related to electric vehicles. In a preview of results that it will present at its annual meeting, BMW said its full-year net profit hit EUR12.46 billion from just EUR3.86 billion in 2020. Revenue increased by 12.4 % year over year to EUR111.24 billion. Both figures represent new records for the German automaker.

The jump in BMW’s annual revenue was driven by increasing the sales of cars, SUVs, and motorcycles. The company’s vehicle deliveries rose 8.4 % from its coronavirus-disrupted 2020 result to just over 2.5 million. This happened despite production disruptions related to an ongoing shortage of chips.

Around 13 % of 2021 deliveries were “electrified” vehicles, representing a total of just over 328,000, an increase of 20 % on 2020 figures. This is still well short of market leader Tesla’s total of 936,000 vehicles delivered in 2021. By 2030, BMW is aiming to have fully electric vehicles account for at least half of its global deliveries.

Russia-Ukraine conflict is worsening chip shortage, analysts say

The ongoing conflict between Russia and Ukraine is likely to worsen the global semiconductor shortage, Moody’s Analytics say, as the two countries are major suppliers of raw materials that are critical in chip production. Russia supplies the global semiconductor market with rare metals, while Ukraine supplies speciality gases. Moody’s Analytics says that the ongoing conflict could have ongoing ramifications for the industry, which has been struggling with the ongoing chip shortage for quite some time now.

“Neon and helium are both gases critical to the production of chips, and Russia and Ukraine are both major players in the global supply chain - so much that neon prices went up more than 10 times following the Russian annexation of Crimea in 2014," the report said.

The report also highlights that palladium, another component used in the chipmaking process, might be affected due to the conflict. Russia is thought to control a quarter of the world’s stock of palladium. However, current stocks of raw materials mean that there is unlikely to be an immediate impact. “But if the Russia-Ukraine conflict drags on, chipmakers in Taiwan, South Korea, Japan, China and other countries will feel the impact,” the report says. It concludes that the impact will be worse in Europe, which is much more reliant on the food and industrial goods that Ukraine produces.

STMicro handed EUR600 million loan

The European Investment bank is handing a loan of over 600 million to semiconductor manufacturer STMicroelectonics (STMicro) for the company’s research and development activities in Europe.
According to a recent press release, the loan will fund investments in R&D activities for innovative technologies and components, as well as in-pilot production lines for advanced semiconductors. These investments will be implemented in STMicro’s existing facilities in Italy and France. They will contribute to the development of technologies and products to address the major challenges of environmental transition and digital transformation in all sectors.

Latest statistics say that the semiconductor market is currently worth more than EUR500 billion, a value that is likely to double by 2030. Right now, Europe accounts for around 10 % of the world’s semiconductor capacity, a figure that represents a significant decline when compared to 2000 (24 %) and 1990 (44 %). This is due to the outsourcing of production to China and other more cost-effective locations.

The European Investment Bank (EIB), who provided the loan to STMicro, actively contributes to European policies in coordination with Member States to strengthen the European semiconductor industry’s R&D, design, and production efforts. The overall aim is to support overall competitiveness of European companies in the semiconductor sector, particularly those that hold market leadership positions.

Canadian auto sales down 12 % in February

Sales of new cars in Canada were down by 12.4 % when compared to a year earlier, according to latest figures published by DesRosiers Automotive Consultants. The consultancy firm estimates that new light-vehicle sales totaled 98,722 units, down from 112,654 in February 2021.
DesRosiers says that last year’s February sales were strong, forming part of an upward surge to the March 2021 peak of 175,186 units, shortly before the global semiconductor took hold of the automotive market.

As we have covered in length, the automotive sector has been hit by a shortage of microchip components induced by pandemic-related disruptions and a surge in demand for electronics. These chips are crucial in the manufacturing of modern vehicles and can be found in virtually all on-board electronic systems.

DesRosiers says that the seasonally-adjusted annual rate of sales for February 2022 came in at 1.62 million for the month, down from 1.85 million last year. This is mostly in line with figures seen over the last 10 months. Sales in February 2020 sales, just before widespread pandemic shutdowns, came in at about 123,375 vehicles.

You have missed some chip shortage news? This is what happened before:

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