BMW sees semiconductor investment wave easing supply crunch

Automotive Industry

Source: Automotive News Europe, 2021-05-07

BMW expects the global shortage of semiconductors hindering automotive production to be resolved as companies and governments zero-in on the issue.

"There is intense focus on the issue globally, so it's to be expected for supply and demand to be back in balance within two years at the latest,” BMW CEO Oliver Zipse said in an interview on 6 May at the company’s driving academy near Munich.

A lack of chips used in everything from navigation systems to certain rear-view mirrors has forced automakers to curtail production just as demand picks up in major economies that are easing pandemic restrictions.

Ford Motor in April 2021 estimated the scarcity of semiconductors will slash earnings by $2.5bn in 2021. BMW has only reported limited stoppages at two European plants so far.

The shortages that arose after consumers snapped up electronic gadgets while confined at home have put in motion broad efforts to boost production.

The European Commission plans to double the bloc's chip production to at least 20% of world supply by 2030, a move that would reduce its reliance on foreign companies for the critical components.

US President Joe Biden has vowed to better secure America's supply chain by reviving domestic chip manufacturing. Taiwan Semiconductor Manufacturing will spend as much as $28bn on new plants and equipment in 2021.

While waiting for investment programs to gather pace, manufacturers have had little choice but to idle plants or take the unusual step of stripping certain high-tech features from select models.

Zipse said BMW has no plans to seek new partnerships or joint ventures despite current restraints. "For critical components, we will stick with long-term supply contracts and a range of different partners," he said.

This will include battery cells critical to accelerating BMW’s rollout of EVs. "From our point of view, we have covered the necessary supplies with long-term contracts," Zipse said.

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