Taiwanese Minister: Chip Makers To Address Car Silicon Shortage

A government minister in Taiwan has responded to the shortage of silicon around the world, which is slowing the manufacturing of everyday items that require advanced chips.

Last week it was reported that Audi (part of the Volkswagen group) was having to slow production because of the computer-chip shortage, forcing it to make 10,000 fewer cars in the first quarter of the year and putting more than 10,000 workers on furlough.

The previous week to that Volkswagen had also slowed production due to a lack of chips; and Daimler (which makes Mercedes), Fiat, Honda, Ford, Nissan, Subaru and Toyota also all reportedly had to suspend production for days or weeks at a time.

Silicon shortage

Into this Taiwan’s economics minister met with executives of major Taiwanese chipmakers.

According to Reuters, she revealed these chip makers are willing to prioritise supplies for auto makers amid a global shortage of chips for the industry.

“Chipmakers are willing to follow the government’s request and try to support auto chips as much as they can to support production in the US, Europe and Japan,” Economics Minister Wang Mei-hua told reporters.

Reuters reported that this silicon shortage for car makers has become a diplomatic issue, with German Economy Minister Peter Altmaier writing to Wang to ask her for help in addressing it.

Wang reportedly also said the United States, European Union and Japan had also been in contact.

The chipmakers are prepared to negotiate with clients of other products to see which clients are willing to delay or cut orders and will try to boost production, Wang reportedly said.

“For example, if their capacity is at 100 percent now, they will try to raise it to 102 percent or 103 percent, with the extra capacity going to make auto chips,” she added.

The Taiwanese government minister is understood to have met with executives from Taiwan Semiconductor Manufacturing Co Ltd (TSMC), United Microelectronics Corp (UMC), Powerchip Semiconductor Manufacturing Corp and Vanguard International Semiconductor Corp.

The chip firms told Wang that they were at working at full capacity at the moment.

Reduced orders

The issue for car makers comes after they had scaled back their silicon orders with Chinese factories making the computer chips because of poor sales of new cars in early 2020, when the Coronavirus pandemic began to fully impact in countries around the world.

But by the end of 2020, it seems car makers were surprised by the strength of the car market, but ordering new chips was not that easy because of the limited number of firms manufacturing the silicon.

Wang reportedly said that chipmakers had warned car makers early last year that they were taking a risky approach if they cut orders at time of strong growth in demand for chips for electronics.

“This appears to be long-term demand so it will take some time to solve the problem,” Wang reportedly said.

Booming demand

Car makers are also now having to contend with the consequences of booming demand for CPUs from other industries,  as the world embraces home working during the Covid-19 pandemic.

This has led to increased demand for laptops and desktop PCs (most notably gaming PCs), coupled with the usual demand from the smartphone sector, plus the arrival of new gaming consoles such as the PlayStation 5.

This has meant there is now a real supply chain issue that is only set to continue in 2021.