What is a semiconductor?

A semiconductor is essentially a microchip which is crucial in the production of electrical devices. These days, this means that so many products that are manufactured, anywhere in the world, contain semiconductors.

Semiconductors dominate our day-to-day lives. The device that you’re reading these words on wouldn’t exist without them.

Brand-new cars, vans and other vehicles are no different. As vehicles contain more and more electrical equipment alongside mechanical components, their production becomes more reliant on semiconductors.

As an indication of their importance, Volvo says that a modern car has more than a hundred components that contain semiconductors.

Infotainment systems, cameras, safety features and vehicle operating systems all need semiconductors, so their shortage is causing considerable headaches for every vehicle manufacturer around the world.

Why has there been a shortage?

The shortage is a culmination of many different factors coming together and resulting in a perfect storm.

The COVID-19 pandemic has impacted supply. Car manufacturers had to shut down their production plants and when they restarted the demand for semiconductors was high, with tech giants like Apple and Samsung manufacturing products to support homeworking and schooling.

Of course, with the pandemic being a global issue, the factories which made semiconductors were also affected. It takes time to restart production of the microchips, so this has had a knock-on effect to the car production supply chain.

Adverse weather has also played a part. More than one in ten microchips are made in the USA. Texas is a hub of their production and the state was hit by a storm in February 2021. As production gradually returns to normal there, one manufacturer has even said that every single semiconductor that they’ll produce in the next 12 months is already reserved. Factories in the Far East have also been affected.

There are conflicting views on when the shortage is likely to be resolved. When the world returns to a state of post-pandemic ‘normality’, the future manufacture of semiconductors is certain to be an issue that’s discussed on the world stage.

Worldwide, the construction and distribution of more than 500,000 vehicles has been delayed by the semiconductor shortage.

How will the shortage affect me?

The semiconductor shortage is a global issue. Its effects are being felt everywhere, not just by us and our customers.

One of the main ways in which the shortage is impacting the manufacture of cars is by the extension of lead times. In some cases, it’s taking longer for vehicles to reach customers after they’ve been ordered.

The specification of cars is also being affected. The technology packs of vehicles are being altered if they’re able to be, or changes are being made to the standard specifications.

Vehicles may be shipped and then recalled at a later date to fix the issue caused by the shortage, or the decision to change a car’s specification may be final.

Each manufacturer is dealing with the shortage in their own way and we’re working with their supply chain experts to make forecasts about when cars will be ready. We’re finding that predictions made are becoming more and more accurate, which gives us confidence in our estimated delivery dates.