HomeNewsWhat is the reason for the chip scarcity in the auto industry?

What is the reason for the chip scarcity in the auto industry?


Last Updated on 22/11/2021 by Riya

Chipset is a major contributor to run any electronic device. You must have heard about mobile chipsets, but chipsets are used not only in mobiles and PCs but also in cars. However, since a few months, the shortage has started appearing in its manufacturing worldwide, which has become a major problem for the companies as well as the customers and stores.

However, now the question must be arising in your mind that what is the work of chipset in the auto industry, let me tell you that most of the modern cars sold today have semiconductor chips installed, even according to Deloitte about 40% of the cost of the modern cars is coming from these semiconductor chips.With the arrival of modern cars, many changes have been made in the technology present in them. These chips are mostly used in power steering, display, WiFi connectivity, and cellular connectivity.

What is the reason behind this shortage in the production of semiconductor chips?

The biggest reason for this shortage is Covid and the lockdown imposed due to it. Due to the Covid lockdown, many people were imprisoned in the house, due to which there was a sudden jump in the use of electronic home appliances and that is why chip-making companies put all their focus on producing electronic home appliances chips for PC, laptops, video games, etc. Due to this, the production of chips used in cars started decreasing.

Which companies suffered the most due to chip shortages?

Volkswagen, Daillmer, GM, BMW, and Toyota suffered the most due to chip shortages. Due to chip scarcity, BMW has also revealed the elimination of touch screen capabilities from some of its vehicles.

What is the solution?

So far, only a few companies are active in chip manufacturing in the world, however, if more plants of chip manufacturing are established, then in the future, we can avoid the problem of this chip shortage.

Although setting up a chip manufacturing plant is very costly, that is why the number of these plants is less. Although talks are going on between India and Taiwan, under which Taiwan can soon invest 7.5 billion in India to set up a chip production plant, which will help reduce the chip scarcity seen in smartphones and cars.

Riya is a technology enthusiast and an avid researcher. She writes about consumer tech, hacking, and technology consumer issues at TheDigitalHacker.
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