Coronavirus: Silicon Shortage Slows Car Production

The shortage of silicon around the world has impacted the manufacturing of everyday items that require advanced chips.

According to the BBC, Audi (part of the Volkswagen group) is having to slow production because of the computer-chip shortage.

Audi CEO Markus Duesmann has now reportedly said the car maker is now aiming to make 10,000 fewer cars in the first quarter of the year and putting more than 10,000 workers on furlough.

Manufacturing disruption

It should be noted that last week Volkswagen has also slowed production due to a lack of chips.

Indeed Daimler (which makes Mercedes), Fiat, Honda, Ford, Nissan, Subaru and Toyota all reportedly suspend production for days or weeks at a time.

Audi’s Duesmann reportedly told the Financial Times car makers had been caught by surprise.

This is because car makers 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, “everybody was quite surprised by the strength of the market” Duesmann reportedly said.

However, ordering new chips is not that easy because of the limited number of firms manufacturing the silicon.

This is made worse by the increased demand for CPUs, 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.