Volkswagen: Expect chip supply problems until 2024

However, 'structural undersupply' might ease in the next six months or so

The ongoing supply chain woes in the semiconductor market are set to last through this year and next, according to Volkswagen, which believes underlying structural problems are unlikely to be resolved before 2024.

This opinion was delivered by the carmaker's chief financial officer Arno Antlitz in an interview with German newspaper Börsen-Zeitung over the weekend.

Antlitz, CFO for about a year now, said the semiconductor situation had not yet improved, and that the structural undersupply may ease somewhat in the third or fourth quarter of this year.

"The first task here is to create greater transparency throughout the supply chain. We then want to stabilize our supply chains via long-term contracts with capacity security," Börsen-Zeitung quotes him as saying.

However, these structural problems, which have been compounded by a surge in demand as economies start to recover from the effects of the pandemic, are unlikely to be resolved until 2024, Antlitz said.

"Industry-watchers from IHS expect production in 2023 to be roughly back to 2019 levels," he said.

Ukraine pain

Antlitz also pointed out that the war in Ukraine is also having an impact on supply chains. For VW, this means constraints around the supply of cable harnesses from Ukraine for production.

A crisis management team was set up by VW and in some cases it has also relocated production volumes to other facilities operated by the same suppliers, he said, but added that these are not intended to replace the production facilities in the Ukraine in the long term and that VW is standing by existing suppliers and would support them where possible.

VW is not the only carmaker suffering from supply chain issues, of course. The Register recently reported that Volvo is pinning the blame on chip shortages after the company experienced a 22.1 percent drop in car sales during March, when compared with the same period last year.

Meanwhile, Ford in the US is selling some vehicles in an unfinished state because of the shortage of semiconductors, with a blank plate being fitted in some modes where the rear seat HVAC controls would normally reside.

Among the bigger problems is an apparent shortage of microcontrollers (MCUs), which is affecting everything from medical equipment to automobiles, with delays in delivery apparently stretching to 50 weeks. A survey by electronic component supplier Avnet found that many engineers are having delay the development of circuit boards, or incorporate a new design that uses alternative components.

Earlier this year, IDC noted that one of the contributory factors of the chip shortage is a lack of investment in the mature process nodes that are used for low-cost production of automotive semiconductors and other everyday parts, compared with high-value components such as the latest CPU chips. ®

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