Europe’s carmakers remain vulnerable – even if many of the destroyed supply chains have only just been repaired after the Corona crash. But an indispensable group of components is missing more and more frequently: semiconductor modules, the heart of all electronic systems and microchips. Some auto production lines have to close again because supplies are stagnating. And simply switching to other partners is often not an option because the total amount available is already extremely scarce. Especially in the powerful producer country China, the production of the central semiconductor raw material silicon is currently underutilized, while demand is skyrocketing.

The German electronics industry sees it a mixed situation, at least in terms of the short-term auto business. “Since spring, the decline in the auto industry in the wake of the corona situation had initially decreased significantly,” explains the managing director of the ZVEI industry association, Wolfgang Weber. “Chip manufacturers had to convert their capacities and find new customers, which was successful.”

Change of production necessary There has been an upswing in entertainment electronics with TV, hi-fi or game consoles. And semiconductor demand is also high in sectors such as medical technology with ventilators and monitors or the core IT business. The car production has now picked up again faster than expected. The chip manufacturers therefore “needed a few months to switch their production again and to be able to meet demand again. Unfortunately, it doesn’t get any faster – the car manufacturers should understand that and take more into account in future”.

One may With all this, don’t forget that high capacity utilization is important for electronics providers. The manufacture of chips, sensors or controllers is expensive, and new factories often require investments in the double-digit billions. Manufacturers would have had to realign their delivery targets.

Overall, the pandemic year 2020 of the globally closely interwoven semiconductor industry with German representatives like Infineon, Carl Zeiss SMT or Siltronic / Wacker are relatively unaffected. After it 2019 was still below average, there was a sales increase of 4 percent on the world market to 428 billion US dollars, about 354 billion euros. However, the early recovery in its own sales is causing acute problems for the automotive industry. “Intensive work is being done to ensure the supply of semiconductors,” says the VDA in Berlin. One is “in contact with the federal government”.

Production losses At Volkswagen, Audi or Daimler for example shifts were canceled recently. There is also more short-time work again. At the VW parent plant in Wolfsburg, the shutdown was extended after the New Year, and a reserve decision on possible reductions applies to the Braunschweig components plant. Before Christmas, the largest car company had complained of a “massively restricted delivery situation”. Works council chief Bernd Osterloh warned: “We have a serious problem – but that is not just a problem for the auto industry.” The VDA is also concerned: “The global automotive industry and electronics suppliers are also affected by this shortage.” External processors and automotive suppliers such as Hella or Continental spoke of bottlenecks.

The current peak in demand for semiconductors is also expected to come as a surprise for chip manufacturers in Asia. The raw material markets are likely to play a role as well. In its monitoring report 2019, the German Raw Materials Agency (DERA) – a specialist authority in the Federal Institute for Geosciences and Raw Materials (BGR) – included silicon as a resource “high potential procurement risks”.

Problem with silicon processing in China Several developments in China would have the pressure still increased, says DERA boss Peter Buchholz. Admittedly there is silicon in abundance – but 15 large smelting plants, which are necessary for its processing, were last shut down in the People’s Republic . One reason for this is said to be insufficient electricity production from hydropower after a lengthy drought in some regions. “And corona-related production losses have to be made up,” added Buchholz.

It is not known exactly how high the proportion of the affected capacities in China is. But if you use production figures, the underutilization becomes clear. Of the total annual global production of silicon of around 3 million tons, according to BGR, about 2.2 million tons were accounted for China – with an actually usable capacity of 5 million tons in the country.

“This is replicated through the supply chain,” says the expert, whose team analyzes raw material trends for the German government. China’s power is still considerable here. The USA, Norway, Brazil, France, Australia, Russia and Germany followed by a large margin among the most important producer countries.

Competitor solar industry In addition, the solar industry is involved as a competitor in the sourcing of semiconductors – although the required purity of the silicon is not as high as with microchips. And China is also a main producer of other semiconductor raw materials such as gallium compounds, which are used in the new 5G mobile communications. The inventory has dropped sharply here, the price for one kilogram of gallium last year from 150 to 260 Dollar shot up.

Buchholz sees no risk of prolonged supply problems. But that is not a reason to give the all-clear. The ZVEI emphasizes that Europe’s chip manufacturers need to build up even more of their own production facilities. There is talk of “technological sovereignty”. Because there will also be more demand in the medium term from the automotive industry and mechanical engineering – keywords autonomous driving and Industry 4.0.

(olb)