The primary reason for the automotive chip shortage is a surge in demand, not the inability of semiconductor suppliers to ramp up production, says IC Insights. Device suppliers shipped 30 percent more IC units to the automotive industry in 2021 as compared to 2020, a much bigger increase than the 22 percent rise in total worldwide IC unit shipments last year. Moreover, 27 percent more IC units were shipped to the auto sector in 2021 as compared to the pre-pandemic year of 2019.
It’s been widely reported that car manufacturers, faced with plummeting demand for cars and forced factory shutdowns, canceled semiconductor orders in the early stages of the Covid-19 pandemic. When the auto industry came back online, foundries were sold out due to a surge in demand for devices to facilitate working, studying and playing at home.
In actual fact, says IC Insights, foundries managed to churn out much more chips than previous years. “IC suppliers should be recognized for the amazing accomplishment of ramping up and supplying a tremendous amount of IC devices to the auto industry last year,” the market researcher writes in a press release.
The upturn isn’t limited to automotive chips. Many CEOs in the semiconductor supply chain, including NXP’s Kurt Sievers and ASML’s Peter Wennink, have admitted that the chip industry has structurally underestimated demand.