Thursday 23rd September 2021

Germany and the chip problem: car manufacturers more and more in distress

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Tesla Model 3 Performance Widebody Lowering 6 Germany and the Chip Problem: Car manufacturers more and more in distress


Due to the sleepy digitization of all areas of life in Germany, the largest economic power in Europe is becoming more and more self-dependent. The corona crisis has aggravated other areas. It seems like everyone is standing in their own way, making wrong decisions, and there are still no workable solutions. The automotive industry is just one of those areas and the trend has been going on for years, if not decades.

German companies overslept - everything

There are many examples of the decline of German high technology. In the field of photography it was Agfa. A company that slept through the trend towards digital photography and was not able to switch in time. When it comes to cell phones, Siemens stands out. In the 1990s and early 2000s, Siemens was still competing for market leadership with companies such as Ericsson and Nokia - something that has been over since the first smartphones at the latest.

Semiconductor technology Chip Germany and the chip problem: Car manufacturers more and more in distress

The reasons are complex, but a lot has to do with the fact that German companies have ignored semiconductor technology and that US and Asian companies now dominate this market, with a few exceptions such as Infineon. In the field of software, too, almost all of Germany's products are niche. In a good online casino bet, at least a certain degree of market dominance can still be recognized.

Automotive industry under pressure

The German and his internal combustion engine, that is a story in itself. It is only slow to convince motorists in this country to switch to an electric drive. To this day, the top models from Audi, BMW, Mercedes and VW are large automobiles with lots of horsepower and petrol or even diesel engines. There are promising models from Ingolstadt, Munich, Wolfsburg and Stuttgart, but they don't come close to the pulling power of a Tesla. And just as the German carmakers are about to gain a foothold in the e-car sector, they are oversleeping the next trend.

Install wallbox yourself Foerderung 2 Germany and the chip problem: Car manufacturers are more and more in distress

Similar to the development of smartphones - from a phone with an integrated camera to a camera with an integrated phone, things are also happening in the automotive industry. Because the latest models from the USA and the Far East are not just vehicles that move with an electric motor instead of a gasoline engine. Instead, they are moving electric monsters with a lot of functions and lots of computer chips inside.

No know-how in this area!

And this is exactly where the problems of VW, BMW and Co. begin: There is a lack of know-how in this area. The Germans can still build the best engines and transmissions, but the use of effective computer chips and the corresponding technology is very difficult for car manufacturers. Not to mention autonomous driving. Not only is there a lack of manpower, but also opportunities. With the exception of Infineon, all other major chip manufacturers are located abroad:

  • NXP in the Netherlands
  • Renesas in Japan
  • Texas Instruments in the USA
  • STMicroelectronics also in the Netherlands

And these are precisely the companies that automakers are most dependent on. In addition, there was a misjudgment regarding the corona crisis. The companies assumed a prolonged downturn and therefore canceled many orders from semiconductor manufacturers. However, despite the crisis, the demand for cars has risen immensely, and the same applies to entertainment electronics: This is what all PC users who need a new graphics card feel.

Semiconductor technology Chip 2 e1627530775242 Germany and the chip problem: Car manufacturers more and more in distress

So far, computer chips have not been perceived by car manufacturers as a key technology. That changes at least a little. VW boss Herbert Diess recently announced that VW intends to get involved in chip design. "Apple, Tesla and others have more definition competence when it comes to semiconductors. In order to achieve optimum performance in the face of the high demands in the car, software and hardware must come from a single source.”Diess is quoted by Wirtschaftswoche. An insight that may come too late.

The crisis intensifies the misery

Computer chips are missing everywhere. It's not just about new techniques, but also about proven ones. The lack of semiconductors for airbags and other control components in cars means that machines in the automotive industry all over the world come to a standstill. According to estimates by experts, 2021 million fewer cars will be produced in 4,5, which corresponds to a decrease of 5 percent. When the demand for cars decreased, chip manufacturers reoriented themselves and supplied the IT industry - one of the industries that was able to benefit massively from the corona pandemic. The demand for computers, laptops, smartphones and the like increased rapidly, because in the home office people have more time and, above all, more need for electronics of all kinds.

Government is also working on solutions

The federal government has now recognized that Germany as a technology location is in massive danger due to the chip problem. Federal Minister of Economics Peter Altmaier, for example, has entered into a cooperation with a large Taiwanese company and the Ministry of Economics is funding a total of 1 German companies with a sum of 40 billion euros by 2023 in order to establish chip production in Germany and Europe. However, it will be a long time before then, because a new factory to manufacture computer chips is a very time-consuming and complicated undertaking.

Semiconductor technology Chip 3 e1627530898559 Germany and the chip problem: Car manufacturers more and more in distress

Of course, that wasn't the end of it!

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