Shortage of chips brings an avalanche of money for new capabilities

But at the same time, analog chips will likely increasingly come from China, Dziczek said. Analog chips, which control a vehicle’s mechanical systems, are a technology “few companies are investing in” at the moment, she said. And many buyers depend on suppliers in China, where trade tensions with the United States remain high.

“Geographic distribution of where the chips are made is a bit of a problem,” Dziczek said.

Another source of concern is the new possibility of a recession, which could impact automakers’ microchip supply plans.

A slowdown could at least temporarily alleviate the problem by reducing demand for new vehicles and making it easier to meet unmet demand.

But Dziczek thinks that even in a recession, demand for vehicles from retail and fleet markets will keep the pressure on chipmakers.

Either way, Burkacky warns automakers to assume that a recession-related reduction in demand will only be a passing situation and that they shouldn’t give up on efforts to improve supply chain transparency. supply.

“The concern is that if people are starting to think, ‘OK, there’s hope the chip shortage will be over sooner than I thought, so I don’t need to take action on my long-term commitments because all my problems will work themselves out,” he said.

Instead, he advised, “Assume that any slowdown in consumer demand is a short-term event and demand will come back. Otherwise, we risk being back in early 2021, caught in the unprepared and late on the offer.”

About Frank Torres

Check Also

NAMAD’s new president is Hugene Fields, a retail outsider

Lester became president shortly before the economy collapsed and caused the number of minority-owned stores …