By on April 11, 2022

Even though the global semiconductor shortage has been going strong for about two years now, the world has failed to successfully manage the situation. Production stoppages remain relatively common within the automotive sector, with manufacturers continuing to attribute factory stalls to an inability to procure a sufficient number of chips. But the excuse seems to have evolved into a catch-all explanation for supply chain issues that continue that go beyond a single missing component.

That makes it a little hard to determine precisely how much of the ongoing production shortfalls can be pinned on semiconductors. But AutoForecast Solutions (AFS) was keen to take a whack at it and determined roughly 1.4 million vehicles have been removed from the automotive industry’s targeted output for 2022 — that’s on top of the 10.5 million units we lost in 2021. While the issue is indeed global, AFS stated that the last batch of vehicles to get the ax was predominantly from Europe.

According to Automotive News, AutoForecast Solutions identified an additional 98,900 vehicles that will never see assembly this week and all but a handful would have been coming out of Europe. Over a longer timeline, the forecast remains particularly bleak for the region as legacy manufacturers begin signaling their retreat. As an example, Volkswagen Group recently announced it would be deprioritizing the EU in favor of the United States and China — with the latter nation taking precedence.

From AN:

European factories accounted for 97,600 of the increase. So far this year, they have eliminated some 747,000 vehicles because of the global chip shortage.

Assembly plants elsewhere in the world saw relatively little chip-related disruption, however. Only about 1,300 more vehicles were axed at North American factories, while no additional cuts were reported in Asia, South America the Middle East or Africa.

End-of-year projections estimated Europe will be shy well in excess of a million cars. North America has fared better with a short of 341,300 vehicles and end-of-year projections hovering just over 500,000. Asia, which has actually been the least impacted by absentee semiconductors due to it being the world’s primary purveyor of chips, is assumed to see 420,500 fewer vehicles than planned with just 211,700 having already been culled.

Though that doesn’t include China, which is reporting smaller (and potentially less reliable) numbers. Though the alleged People’s Republic doesn’t seem to be losing volume due to missing chips so much as it is to sudden, localized declines in productivity.

China has resumed aggressive lockdowns in places like Shanghai, creating problems for parts suppliers and logistics companies operating within the region. We recently reported on how citizens are being forcibly sealed into dwellings or being carted off to quarantine camps, with those wishing to continue work having to live inside factories full-time. The Chinese Communist Party has also reinstated stringent shipping restrictions that previously delayed the exportation of goods out of the country.

These executive decisions (including similar actions taken by nations other than China) previously upended global trade and are likely to do so again — likely making an already bad situation much worse. For now, the region’s chip shortage problem appears to be minimal. China is only down by an estimated 70,000 vehicles as far as the chip shortage is concerned. However, Shanghai citizens now appear to be in open revolt with the government doubling down on restrictions to spur compliance. This could have severe ramifications for global supply chains if factories are not allowed to operate normally.

In Europe, the war in Ukraine is creating similar problems. Many companies have cut ties with Russian facilities quite literally overnight while the conflict itself creates additional issues for regional supply lines — including those pertaining to chips. If you want to do a deep dive into how all of this works, the Harvard Business Review published a piece foreshadowing how the return of Chinese lockdowns and Russo-Ukrainian might impact the market long-term.

The summary is that Ukraine supplies a lot more raw materials than you probably realize (e.g. neon gas used in semiconductor production) in addition to the stuff you’ve probably heard about, like wheat. The same is true for Russia and both nations are now restricted, albeit for very different reasons, from engaging in their usual trade. Though the resulting conditions are effectively the same for the global market, ushering in higher costs and fewer materials for practically everything.

[Image: Dan74/Shutterstock]

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22 Comments on “Chip Shortage Lambasts Europe, Supply Chains Confront New Problems...”

  • avatar
    CKNSLS Sierra SLT

    So both Ukraine and Russia supply lines are off for the foreseeable future. This whole supply thing, i.e. chips and what ever else is going to be around-here is my guess for at least the next 18 to 24 months-or maybe even beyond.

  • avatar

    I hereby declare this to be the New Malaise Era.

    Cars may not suck anymore, but the whole process of building them and buying them has become a nightmare.

    • 0 avatar
      SCE to AUX

      A different kind of “production heck”, for sure.

      Here in the US, one of my company’s suppliers is temporarily importing workers from its Mexico plant just so they can meet our (modest) volume requirements. They apparently can’t find any more local hires.

    • 0 avatar

      The old Malaise was much preferable, if you knew your way around emissions and other things that made them less favorable. Today there’s exponentially more users that are way better off sticking to new or stuff with a warranty , extended or otherwise. They’ll bring home an super clean Saab with the dash lit up like a Christmas Tree and leaking various fluids. By the way in another fifty years we’ll all be chicks.

    • 0 avatar

      You look in the driveway, and assess what you have. There is no easy replacement, even for my base Jetta S, or the 230k MDX. I’d have bought a new truck by now (mama likes Q5) but that’s not possible either. I feel bad for anyone who loses a car by theft or accident, and needs one NOW. As for me, change the fluids and keep on it….

  • avatar
    SCE to AUX

    Building zero cars due to factory shutdowns is even worse than building fewer cars due to chip shortages. With over half of Tesla’s total production currently coming out of Shanghai, for instance, such shutdowns are costly.

    • 0 avatar

      If the current administration was smart, it’d bring back BBB and drop the union-only bulls**t. We need to onshore as much of this as possible.

      • 0 avatar
        SCE to AUX

        In this case Tesla Shanghai delivers product for the local market. Very little comes to the US, except for some LFP battery packs in a few “low-end” cars.

      • 0 avatar

        C’mon Fm, Now your lobbing up softballs :)

      • 0 avatar

        Yeah right. And maybe your kids would like to grow up earning less than minimum wage, bouncing from one job to another, depending on who’s got the better pizza nearby?
        All those masses yearning to be free should be put on treadmills until they earn the right to stay?
        No easy solutions anywhere.

      • 0 avatar
        Jeff S

        I finally got my new hybrid Maverick XLT after waiting 8 1/2 months. We need to onshore as much as possible especially microchips.

  • avatar
    Bill Summers

    Yup. Yet more blowback from the US war against Russia and China, and the CIA coup to overthrow the Ukrainian government.

    • 0 avatar
      CKNSLS Sierra SLT

      Gotta love the Internet- crazy theories abound…..

      Where are those black helicopters with no markings……

      • 0 avatar

        Those were too obvious, so now they’re disguised as TV/radio station traffic reporter helo’s. The agents no longer wear the dark suits, so they think they blend in, but the age-group, body type, and haircuts still give them away. There’s no alternative to the wrap around sunglasses so you can’t see them see you.

        The latest surveillance vans are disguised as FedEx, UPS, DHL, and Amazon trucks, with the agent in uniform, but still with the sunglasses. I followed one FedEx truck through my neighborhood, and it never stopped, it just went slowly down several streets.

        It stopped at one place, but the driver didn’t get out. I ducked into an alley and turned around, and after he thought I was gone, he started driving down the street without delivering anything. I followed from a greater distance, and he drove up and down several streets without stopping, and pulled into a convenience store lot. As I drove slowly by, the driver glared at me.

        It’s not a theory, they’re out there – and they’re up to no good!

      • 0 avatar

        Oh, and don’t believe the omicron in Shanghai baloney. There were 13,600 positives in a city of 24 million, all asymptomatic. That wasn’t enough to justify any lockdown.

        Emperor Xi’s security saw a nascent challenge to central authority, if not a rebellion brewing, and the lockdown that doesn’t allow people to get food is punishment. They’re being starved into submission. They did the same with whole provinces in the north.

        Xi’s return to elements of communist economics is hard on the population, and they’re getting restive. China is far from a revolution, but the response to even the threat of possible unrest is very disruptive, and will have consequences Xi and company didn’t foresee.

    • 0 avatar

      Uh that plan already succeeded eight years ago.

  • avatar

    Successfully manage the situation in 2 years? It takes 4 years to build a new IC fab plant.

  • avatar

    Lambasts? Chip shortages harshly criticize Europe?

    • 0 avatar

      Well, to be fair, “lambast” apparently also means “to assault violently”… a clumsy metaphor, but not entirely-stupid. (Though I thought what you did when I first saw the headline; a verbal lashing is also the first thing I think of.)

  • avatar

    This is worth a watch (CNBC: “Why Russia’s Invasion Of Ukraine Has Sent Automakers Scrambling”):

    Bonus: You get to see how modern wiring harnesses are assembled. (I wonder if their hands get tired?)

    Double Bonus: When you see the vehicles moving through European assembly plants at different ‘altitudes’ (ex. following the 4:50 mark), the European OEMs tend to do that a lot for ergonomic reasons. They’ll even tilt the vehicle sideways in some cases. Most assembly plants in the U.S. don’t do that — the worker adjusts to the vehicle and too bad about your back problems.

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