Stuttgart, Munich, Dusseldorf Marc Alber has repeatedly had to send a courier service to Stuttgart Airport from one minute to the next for almost two years. If a delivery of semiconductors arrives unexpectedly, the managing director of the family company Geze has no time to lose. Without the semiconductors, production at the Swabian specialist for intelligent opening and closing systems for buildings would come to a standstill.
But that costs money: Alber sometimes shells out 20 times the previous price for the chips – and punctual delivery is still unthinkable, even though the family business subjects 90 percent of the supply chain to a risk analysis.
But where there is nothing, nothing can be analyzed. Like Geze, thousands of companies are fighting for a scarce commodity: chips. The pandemic and the associated digitization have triggered a surge in demand that is overwhelming semiconductor manufacturers.
Above all, there is a lack of those components that German industry needs most urgently: chips that are produced using mature processes by contract manufacturers in Asia. TSMC, the number one among the so-called foundries, is now building such production facilities on a large scale. Other manufacturers also invest billions in factories. But that doesn’t help much at first, emphasizes Peter Fintl, chip expert at the consulting firm Capgemini: “The big investments in more mature technologies are starting now. It will therefore take a few more years before the supply gap is closed.” There is a risk of a permanent lack of chips.
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A new crisis every week
“Almost every week there is a small or large crisis somewhere,” states Rutger Wijburg, production director of the Munich semiconductor manufacturer Infineon. Sometimes it’s a snowstorm in Texas that paralyzes production, or a power failure at Germany’s most important chip location in Dresden, like last fall. “In the last 30 years I have not experienced such a disruption in the supply chain,” says the experienced chip manager.
Car manufacturers are particularly hard hit. The true extent of the chip bottlenecks in the industry is currently only being covered over by the fact that far fewer vehicles are being built than are possible and necessary, says Matthias Zink, Executive Vice President Automotive Technologies at the Franconian supplier Schaeffler. In addition, customers are currently accepting longer delivery times. Zink: “If we go back to the old quantities, the problem would suddenly become more serious.”
An important reason for the run on the components is the boom in electric mobility: “The demand for semiconductors in cars has increased enormously,” says Michael Adam, who is responsible for the chips at the BMW car company. Chips for 600 euros are installed in cars with combustion engines and 2,500 euros in electric vehicles.
According to consulting firm Alix Partners, autochips are likely to remain in short supply until at least 2024. The experts predict that the worldwide capacities in the chip industry would simply not be sufficient to serve the entire needs of the automotive industry.
Waiting for the new Thermomix
But not only car buyers need patience. There is also a shortage of consumer goods. Anyone who orders a Thermomix currently has to wait ten weeks before the digital cooking machine arrives at home. “At the moment, the global shortage of semiconductors is having a major impact,” says Thomas Stoffmehl, head of Thermomix manufacturer Vorwerk.
Vorwerk has the Thermomix food processor manufactured in France. Layers fail because there are no semiconductors.
(Photo: picture alliance / abaca)
The order books are also full at Vorwerk. 1.5 million units of the cult food processor were sold worldwide in 2021 alone – more than ever before. Because a microcontroller required for the Thermomix is scarce worldwide, Vorwerk had to shut down production. In the main plant in France, production of the Thermomix was reduced and shifts were canceled in certain cases. The longer delivery times may last into autumn, fears Stoffmehl.
>>Read here: Dependent on America: The German industry also lacks the guts when it comes to chips
Microcontrollers are in great demand around the world. Manufacturers’ sales of these components shot up last year by more than a quarter to a good 20 billion dollars. The leading providers, chip companies such as NXP, Microchip or Infineon, did not get nearly as many goods from the contract manufacturers in the Far East as they needed. One of the reasons: they had reserved too little capacity. In 2019 the business had shrunk by seven percent, in 2020 it went down two percent. Nobody expected such a boom.
EBM Pope complains about “distribution battle”
The new head of the fan manufacturer EBM Papst, Klaus Geissdörfer, now expects a permanent chip crisis. “We got off to a good start in the first two months of the fiscal year, but we expect massive supply disruptions for electronic components again in the next three months.” The fiscal year began on April 1st.
The manager fears that the chip shortage will last at least the whole year. This jeopardizes the goal of achieving double-digit growth again. Last year, the Swabian family company’s turnover climbed by ten percent to 2.3 billion euros.
>>Read here: Catching up with the chips: New Infineon boss calls for more speed with subsidies
EBM uses similar components in its fans as the car industry uses in its electric vehicles. Geißdörfer: “We’re really fighting against the big players in the world when it comes to distributing these products.”
There is no quick improvement in sight. The semiconductor manufacturers cannot expand their plants in the short term. There is a lack of equipment. “The big suppliers have trouble delivering the machines in accordance with the customers’ wishes,” complains Infineon board member Wijburg. “Twelve months delivery time is now common for the tools, 18 months and longer are also not uncommon.”
In view of the political tensions between the West and China, the situation could worsen in the future, the manager warns. Some of the major chip contract manufacturers are based in the People’s Republic, and they also produce on behalf of Western companies. “It could be that China uses parts of its capacity for itself,” warns Wijburg.
Meanwhile, semiconductor customers are breaking new ground, explains Capgemini consultant Fintl: “The industry is getting better and better at adapting to the lack of chips. Thanks to adapted designs, many customers can now switch to alternatives if a semiconductor variant is not available.” Necessity is the mother of invention.
More: The race to catch up with chips threatens to fail – the future of German industry is at stake