Chip crisis to last beyond 2022. Here's what Volkswagen's CFO says about it

  • Volkswagen CFO said auto sector bottlenecks would likely start to ease towards the end of 2022, with production returning to 2019 levels next year.
A wide range of functions in modern cars are controlled by chips. (Bloomberg)
A wide range of functions in modern cars are controlled by chips.

The semiconductor chip supply would last well into 2024, says Volkswagen CFO Arno Antlitz in an interview with German daily Boersen-Zeitung. He said that the chip supply is unlikely to be enough to completely satisfy the demand of the auto sector until 2024. This is not good news for the industry as it has been reeling under pressure from several bottlenecks, including the semiconductor crisis.

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Antlitz said that although bottlenecks would likely start to ease towards the end of this year, with production returning to 2019 levels next year, this would not be enough to meet heightened demand for the chips. "The structural undersupply will likely only resolve itself in 2024," Antlitz said.

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Modern cars are more about software than just metals and hardware. They rely heavily on chips for various functions. From safety to performance - a wide range of functions in modern-day vehicles is controlled by chips. A lack of supply of these tiny parts means a major disruption in the auto industry. The industry has been facing a severe shortage for the last more than one year.

During the first wave of pandemics, when automotive factories were shut and the mobility sector was severely impacted due to lockdowns, demands for consumer electronic goods surged rapidly. The semiconductor industry shifted its focus to supplying chips to the electronics industry. Later when the auto industry reopened, the chip sector was unable to cope with massively surging demands.

Besides the chip crisis, the parts shortage too is hurting the auto industry. In the last more than one month, the auto industry is facing a crunch in wire harnesses, as it is majorly manufactured in Ukraine, which is currently at war with Russia. A lack of wire harnesses from Ukraine is causing some productions shifts to be cancelled, Antlitz said. He also mentioned that Volkswagen has been establishing new supplier relationships to source the component from other countries.

First Published Date: 10 Apr 2022, 14:05 PM IST

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