Addressing Chip Shortage: Challenges and Future Outlook for the Automotive Industry

The ongoing shortage of chips caused by the COVID-19 pandemic has greatly impacted the automotive industry. Car manufacturers have taken various measures, including personally visiting chip factories to secure supply. Although the chip supply situation has improved, geopolitical risks still pose uncertainties for the future.

To enhance domestic chip production capacity, Germany has decided to provide substantial subsidies to attract chip giants to invest in local factories. Intel and TSMC have already planned to establish plants in Germany, with TSMC specifically focusing on supplying automotive chips. However, increasing chip production capacity takes time and is influenced by multiple factors. The pandemic has led to factory shutdowns and disrupted supply chains in Southeast Asia. Moreover, the low return on investment and high complexity of automotive grade chips have reduced manufacturers' interest in producing them. High initial investment and long validation cycles have also contributed to elevated manufacturing costs.

Data shows that shipments of power semiconductors have shown robust growth in the first half of 2023. However, automotive grade chips are still facing supply shortages. Market research forecasts that the global automotive chip market will surpass $115.78 billion by 2030, with a compound annual growth rate of 11.5% between 2022 and 2030.

Market research institutes have warned that the increasing demand for high-performance chips in electric vehicles has resulted in supply shortages for several critical automotive chip types.

According to a report by Roland Berger and China Automobile News, the chip shortage issue that started in 2020 is expected to continue until 2025.

In conclusion, although the supply of automotive chips has improved, uncertainties remain. Germany's efforts to enhance domestic chip supply by attracting manufacturers to invest in local factories are ongoing. However, increasing chip production capacity takes time, especially for automotive grade chips that require significant investment and have long validation cycles. The global automotive chip market is expected to grow, but supply shortages may persist. Therefore, the chip shortage issue could continue to be a concern in the future.