The impact of the Covid-19 pandemic on the availability of semiconductor chips took a drastic toll on all facets of the automotive industry, and in turn the global economy.
During the first half of 2023, however, losses identifiable as specifically related to the semiconductor shortage fell to about 524 000 units globally. What was unique about the pandemic period was the wholesale shortages among virtually all suppliers, impacting multiple component types . Phil Amsrud, senior principal analyst in the S&P Global Mobility supplier and components team, estimates that the value of semiconductors installed in vehicles averaged $500 per car in 2020, but is forecast to reach $1 400 per car by 2028.
While demand for chips from the consumer electronics industry has softened recently, it is likely to rebound while the use of semiconductors in autos continues to increase, which are factors indicating continued pressure. Meanwhile, the structural lack of capacity for mature node capacity has not been addressed. Geopolitical trade risks remain as well, as evidenced by mainland China’s decision in early July to restrict exports of some key semiconductor materials.
There also is the question of how OEMs approach the manufacturing capacity equation, following two years of lower volumes but — in some cases — stronger profits. Faced with lower capacity, largely due to the chip crisis, automakers were able to command higher pricing, heavily reduce reliance on incentives, and allocate chips to higher-margin products and trim levels within product lines.