Global shortage of integrated circuits and its impact on fine chemical suppliers
The current global shortage of integrated circuits (or ICs) is the result of ongoing logistics challenges and manufacturing delays caused by the closure of COVID-19, as well as the large-scale market changes that occurred before the pandemic began. Another negative development is the recent fire at the Renesas chip manufacturing plant in Tokyo. Renesas has nearly one-third of the global automotive microcontroller unit chip market share.
What is the meaning of integrated circuits?
Integrated circuits are the cornerstone of electronic technologies used in healthcare, communications, computing, energy transmission, and transportation. IC is composed of semiconductors, half of the global demand comes from the United States, supporting more than 1 million jobs and nearly 200 billion US dollars in revenue.
Why are integrated circuits so important to the automotive industry?
The automotive industry is undergoing a technological paradigm shift. In response to government emission requirements, they will provide electric vehicles. Other start-ups and well-known automakers have also joined Tesla’s ranks. They have all promised to achieve electrification first, and then autopilot, in order to shape the future of the mobile industry.
Traditional diesel locomotives will not be ignored, and new safety technologies include collision avoidance systems, adaptive cruise control and complex displays.
In all cases, these technologies make extensive use of electronic devices that use integrated circuits as brains.
What impact does the shortage of integrated circuits have on car assembly?
The increasing demand for technology-intensive vehicles and supporting transportation infrastructure has created a bullwhip effect and disrupted the automotive value chain. Due to shortages, companies such as Honda, Volkswagen and Toyota have reduced their production lines. IHS Markit stated that they expect 1 million cars to be postponed in the first half of 2021, but they still have hopes that the auto industry will recover in the rest of the year, even though they say the situation is “unstable.”
Fitch International said that the duration of the IC chip shortage may be much longer than many people initially expected, and it may last until early 2023. This may cause damage to suppliers of auto parts, and demand for these parts may be stalled due to production delays.
How do fine chemical suppliers respond to the challenges of the automotive market and the integrated circuit market?
Fine chemical suppliers are the key to helping alleviate the current bottleneck in the supply of integrated circuits, and also help to ensure that the automotive industry can make up for lost production. They are facing tremendous pressure to provide raw materials for integrated circuit production and find innovative ways to increase production and deliver to customers. click here to learn more about chemical suppliers
Other fine chemical suppliers of automotive electronic components, including rigid and flexible printed circuits, sensors, relays, switches, motors, and wires and cables, are struggling to manage inventory and production, and plan to increase significantly after the IC shortage eases.