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Sanctions against China’s SMIC hit American automakers
fifteen.01.2021 [12:28],
Alexey Razin

The challenges faced by the semiconductor industry in the past year have intertwined in bizarre ways, and the pandemic was not the only source of trouble. American automakers, for example, have suffered from the imposition of sanctions by the country’s authorities against the Chinese company SMIC. Taiwanese TSMC could not cope with the influx of customers.

Image source: Reuters

At the quarterly reporting event, TSMC representatives explained that in the third quarter of last year, the demand for semiconductor components for cars was at a low level, and market participants faced a sharp rise in the fourth quarter. All production facilities of TSMC in the context of the pandemic were focused on meeting the needs of other market segments. It will not be possible to eliminate the deficit in a short time due to the length of production cycles in time, but the company is ready to work on this problem on a priority basis. TSMC was even forced to re-equip part of its production lines for the production of auto components in order to speed up the elimination of the shortage. This type of product will continue to be in high demand this quarter, as TSMC management expects.

As Reuters reports, citing knowledgeable sources, after the introduction of US sanctions against the Chinese company SMIC, auto component developers tried to transfer their orders to the TSMC conveyor, but there was no place there, which only exacerbated the situation. Finding an alternative contractor turned out to be not so easy, but GlobalFoundries eventually announced an increase in demand for auto parts by 50%.

The American company Ford suffered from a shortage of semiconductor components, it had to suspend the assembly of Escape crossovers in the USA and cars of the Focus family at an enterprise in Germany. None of the contractors has reserves to increase the production of components by one and a half times, so automakers have to be patient or spend more money on priority procurement of components for the most important models.

AutoForecast Solutions experts expect automotive semiconductor shortage to last at least six months. As of mid-January, all automakers collectively have lost the ability to produce at least 202,000 vehicles, analysts say. The push by some carmakers to build up more stocks of chips for the future is also exacerbating the shortage.