Will chip crisis plague auto industry for years? VW, BMW, Daimler fear so

Semiconductor shortage has gripped the automotive industry since last year and it still seems far from over. The crisis has led many auto majors to slash or even pause their production for weeks leading to billion-dollar losses. In a time like this, Volkswagen CEO, Herbert Diess' statement may inflict more pain if not less, where he told Bloomberg that the crisis will linger on for years.

Diess said that the industry might have to stay in this crisis for the next few months or even years. “The internet of things is growing and the capacity ramp-up will take time. It will be probably a bottleneck for the next months and years to come," he said.

This gloomy prediction was seconded by Ola Kallenius, chairman of Daimler AG and Oliver Zipse, head of BMW AG. Kallenius said that the semiconductor shortage may get resolved by 2023 whereas Zipse forecasted that the crisis may stay for another 12 months.

The Bloomberg report mentioned that sales of Volkswagen and Mercedes-Benz have been hit this quarter due to factory shutdowns in Malaysia. The country has emerged as a major chip testing and packing hub in recent years. Also, key suppliers including Infineon Technologies AG, NXP Semiconductors NV and STMicroelectronics NV operate their plants in the country.

Daimler’s Kallenius conveyed that the situation may start to ease around the fourth quarter though he guesses that there might be fallout from a “structural" demand issue that may influence industries next year.

The auto industry worldwide will need roughly 10 per cent more production capacity for chips, Murat Aksel, Volkswagen's purchasing chief was quoted in the report. Diess said that the automaker is hoping to overcome issues risen due to the Covid-19 outbreak in Malaysia “toward the end of this month, probably next month, and then recover in the last quarter of this year".