Pass the Chips: VW Group Demands More Semiconductors for Europe

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Residual complications from COVID-19 lockdowns and overdependency on Central Asian suppliers have left most of the automotive industry fretting over where they’ll be sourcing their semiconductor chips in 2021. What started as an issue forcing a handful of manufacturers to rejigger their assembly schedules has evolved into a worldwide problem. This week, practically every automaker with a global footprint announced that it would be suspending production at key facilities to contend with the shortage or issued warnings that their Q1 earnings might be negatively impacted if supply failed to stabilize.

On Thursday, Volkswagen Group decided this was unacceptable and demanded that something be done about it in Europe — which is the region that has arguably been hit the hardest. 

“We won’t produce chips ourselves,” Markus Duesmann, VW Group’s board member for R&D and CEO of Audi, told Reuters in an interview. “But of course we would like to have strong chipmakers that are at least on par with Asia and the United States.”

Noting that technology would be essential for VW’s success, Duesmann suggested that Europe really should be leading in modern tech his company driving the charge. While not the first automaker to do so, Volkswagen has also announced how important software would be to the business moving forward — though we’d suggest it has a ways to go before it can brag about it. However, without the necessary components (semiconductors) to store and move said data, the point is moot.

The chips must flow.

From Reuters:

One way to achieve this, he said, could be funding programs modeled after an existing plan to boost Europe’s battery cell technology under a scheme called Important Project of Common European Interest (IPCEI).

Germany on Wednesday said European countries were planning to support the local production of technology hardware, including processors and semiconductors, via an IPCEI, with targeted aid that could result in investments of up to 50 billion euros ($60 billion).

With the demand for semiconductor chips unlikely to dwindle anytime soon, it seems a sensible plan. But there’s currently no cosigner willing to foot the bill or a strategy for exactly where the funding will be directed. That’s understandable since everyone is scrambling to mitigate the core issue. However, Europe will need to act fast against the chance that other regions decide it’s better to hoard the chips they have now than trickling out components to keep global supply chains moving.

[Image: Gyuszko-Photo/Shutterstock]

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