Article: The Semiconductor Shortage: Are Car Companies Now Consumer Electronic Companies?

The Semiconductor Shortage: Are Car Companies Now Consumer Electronic Companies?

Forbes Business Council publishes article by Actify CEO Dave Opsahl

CEO at Actify, Inc., helping manufacturers to build some of the world’s most complex and advanced products.

There has been a great deal of press about the shortage of semiconductors and the impact that it is having on the auto industry’s efforts to recover from the 2020 pandemic slowdown. The good news is that demand for vehicles is much stronger than the pundits had predicted, but automakers and their Tier 1 suppliers are still struggling with both supply chain disruptions and the reportedly low availability of skilled workers. While there are lots of other material shortages, the semiconductor issue seems to have gotten most of the attention. Many articles have suggested that the semiconductor shortage was caused by the decline of U.S. chipmakers and the shift of production to Asia. However, according to the Semiconductor Industry Association’s 2020 Factbook, U.S. semiconductor companies had a 47% global market share (Korea was next at 19%) in 2019, and nearly 45% of their front-end semiconductor wafer fabrication capacity was in the United States.

As the CEO of Actify, a company that offers an automotive program management solution, I work with suppliers in the automotive industry. Throughout the pandemic, I have seen how issues in the supply chain have had dramatic effects on their businesses.

The current semiconductor shortage is real, but the causes mostly appear to be classic supply chain issues and not some dire indication that the U.S. has lost its manufacturing competitiveness or outsourced critical production to foreign competitors. One reason I’ve seen for today’s shortage in the auto industry is that the car companies dramatically slashed chip purchases in 2020 (paywall) in response to fewer car purchases and plant shutdowns. Later, they were all trying to ramp up production again and discovered that semiconductors were not immediately available. Look at the pattern the Semiconductor Industry Association illustrated of integrated circuit sales in the auto industry for last year.

I doubt that any industry could respond effectively to that kind of demand fluctuation, but since semiconductors can have a production lead time as long as 26 weeks, there was no chance.


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