Smartphone availability is expected to recover in early 2022. Chip supply constraints are also expected to impact iPad production. Investment firm Wedbush estimated that Apple will be short of more than 5 million iPhone 13s for the 2021 holiday season if consumer demand is consistent with current trends. Apple is expecting that the total number of iPhones produced could be lower by 10 million units due to the chip shortage. Samsung looks to be reducing five potential flagship handsets down to three. Even the two largest smartphone manufacturers, Samsung and Apple, have become affected by the chip shortage. By Q3 2021, some only received 70% of key components. Smartphonesĭuring Q2 2021, smartphone OEMs (original equipment manufacturers) and component suppliers reported that they were receiving only 80% of their requested volume of key components. While increased electric vehicle use will mitigate greenhouse gases, the dependence of the automotive industry on semiconductor manufacturing will become even more critical. The growing emphasis on electric vehicle manufacturing is certain to consume vastly more semiconductor chips in the future. A typical gasoline engine car uses from 50 to 150 semiconductors, but an electric vehicle can use up to 3,000 semiconductor chips. While COVID-19 has changed consumer spending patterns by increasing the demand for consumer electronics, the automotive industry’s move to electric vehicles is also increasing the need for chips.

Globally, all major manufacturing regions in the automotive industry have been affected.

COVID-19 labor restrictions and the semiconductor shortage have contributed to a decrease in domestic UK car production by almost 30% from pre-pandemic levels. Renault estimates that 500,000 fewer vehicles will have been produced in 2021 due to the shortage of semiconductors, and its profit outlook has been maintained by raising car prices and cutting costs. The European Automobile Manufacturer’s Association said that new car registrations were down by 25% in September 2021 from the previous year and that Volkswagen reported a 28% decline. However, Toyota does expect to meet its annual production forecast of 9 million vehicles by the end of its fiscal year in March 2022. By October, Toyota announced cuts to its November vehicle production by as much as 15% due to the ongoing semiconductor shortfall and difficulties obtaining supplier parts in Southeast Asia. Although Renesas restarted manufacturing in June, production lagged demand. Toyota is one of Renesas’s largest customers. Despite its strong mitigation measures, Toyota was also affected by the semiconductor shortage when Renesas Electronics reported a fire at the end of March 2021 at its plant in Hitachinaka, Ibaraki Prefecture, Japan, which historically has provided 30% of the global market for microcontroller units in automobiles. In November 2021, General Motors announced a restart in production at formerly closed plants.Įarly in the pandemic, Toyota was the only automaker not disrupted significantly by the chip shortage due to mitigation measures developed with their microcontroller units’ suppliers after the 2011 Tohoku earthquake and tsunami. At that time, IHS Markit estimated that the semiconductor shortage would result in 672,000 fewer light duty vehicles being produced globally during Q1 2021 and that North America could see 100,000 fewer vehicles made. Shortages in sourcing semiconductor chips continued into the spring of 2021, with major automakers such as General Motors, Ford, and Stellantis (formerly FIAT Chrysler Automobiles) having to close or reduce production of some models during Q1 2021.

Semiconductors are critical to the manufacture of automobiles and are used for power management, safety features, sensing, displays, and vehicle control. The automotive industry consumes about 10% of the global semiconductor market. By Q3 2020, demand for semiconductors had surged, creating a V-shaped recovery for personal computers, mobile devices, automobiles, and wireless communications. However, demand for silicon chips rose due to pandemic working conditions as consumers increased their use of laptop computers, 5G phones, gaming systems, and other IT equipment. The beginning of the pandemic lockdown in 2020 led to a sudden drop in manufacturing due to hastily canceled orders and just-in-time practices. A previous paper from AIR touched on the economic ramifications from the Covid-19 pandemic as a stark reminder of the importance in understanding complex vulnerabilities in today’s interconnected world. Automobiles and electronics have been adversely affected by the COVID-19 pandemic and the subsequent semiconductor shortage.

Supply chain issues 2021