When will car OEMs’ chip shortage end?
Latest news reports indicate that chip shortage for OEMs will be prolonged into 2023 however you could argue that this has always been on the case.
The above article is not new, but given the recent reports of a prolonged chip shortage in the industry I think it serves to be revisited. Why?
Firstly it offers some good insight into the pressures that OEMs are facing in purchasing chips, and the fact that it isn’t as simple as “they’re going into tablets and smartphones instead”. That would be comparing an apple with an orange.
The interesting part is when you look at the economics of the situation. Chip foundries are operating at close to 90% utilisation, and creating new capacity will take around 3 years. Hence, the best possible case scenario that would mean mid-2023 for new capacity.
However, this will also be causing a watershed moment behind the scenes.
As most of us will know, we’re heading towards either a “CASE” future or that of the “software defined vehicle”. Point being, the processing power/requirements of the car as we know it are due a rethink, as the question of how the connected vehicle operates computationally in order to provide a good user experience (i.e. low latency experience) is utterly critical. Can that be achieved by edge computing or high speed data connections? Either way, there is a chip shortage to accommodate in this equation.
Either way you look at it, the required technology architectures are inevitably migrating to the processing capabilities comparable with high-end gadgets, hence the demand from OEMs for chipsets (of smaller sizes which are in higher demand than the chipsets they currently use) increases too. Couple that with current chip shortage, and it has given rise to a variety of approaches/solutions from OEMs, with either cars in fields waiting for ECUs, “non-essential” features or options being removed from the spec sheet, or features essentially “dead-on-arrival” that will require dealer-fit remedial work once the components are available!
Ultimately the circumstances on the ground can be considered to be in need of a longer lasting solution and an example of this coming into effect is exemplified by Bosch (along with a variety of other Tier-1s), which is now marketing its ‘Vehicle-centralized, zone-oriented E/E architecture with vehicle computers’ which can be found here.
So couple this with the fact that this chip shortage will – it seems – last at least till 2023, (well into the current development cycles of all OEMs) and it is likely that this situation will have accelerated – by at least several years – the OEMs internal agenda for redesigning their CAN bus architectures to reduce chipsets dependency and prepare for the new connected future.