The effects of the global microchip shortage are expected to remain throughout the first half of 2022, according to a new report from Automotive News.
The publication recently spoke to experts from the European semiconductor industry, including STMicroelectronics – a major French-Italian chip manufacturer that’s currently building a new chip manufacturing plant (referred to as ‘fabs’) near Milan, Italy. The company’s head of quality and manufacturing, Orio Bellezza, said the company began investing in the new plant back in 2018 as it anticipated an uptick in demand for semiconductor chips. The plant is just now beginning to receive machinery to produce silicon wafers and semiconductor chips, with the facility set to produce its first chips in the first quarter of next year. Automotive customers are not expected to receive chips from this facility until late 2023.
This long lead time on fabs is a driving factor behind the chip shortage. While a new automotive plant can go from an idea to reality in as little as six months, a fab takes about five years to be completed, AN reports. The complex nature of semiconductor chips also means it takes about five months for a fab to process and fulfill an automaker’s order, making it difficult for automakers to plan ahead amid rapidly changing market conditions. Most fabs also run for 24 hours a day, 365 days a year, which makes it impossible to ramp up production by simply adding overtime shifts.
The unique demands of the auto industry are another driving factor behind the shortage. While many chip makers focused on so-called ‘miniaturization’ in recent years as consumer electronics downsized, the auto industry instead places emphasis on longevity and reliability. For this reason, only certain chip fabs can supply the automotive industry. STM’s plants mainly produce chips for airbags, in-car navigation systems and keyless entry systems, AN says.
In short, the complicated and time-consuming nature of chip manufacturing makes it hard for the industry to rapidly respond to the sudden parts supply crunch it is currently facing. Chip shortages are therefore expected to remain throughout 2022, though GM expects a slight improvement in the New Year as more chip production comes online.