The Taiwanese government says the global semiconductor chip supply should revert to normal levels sometime during the final quarter of this year.
The estimate came in response to an effort by U.S. Senators coax that government into assisting with boosting production to fill the gap between what’s needed and what’s available. Automakers in the U.S. have been forced to shut down plants sporadically due to the dearth of available chips.
Last week, Michigan’s two U.S. Senators, Gary Peters and Debbie Stabenow, plus Ohio Senator Sherrod Brown sent a letter to a Taiwanese official thanking the country for its efforts to help with the shortage. However, they also noted additional measures could be taken to further improve the situation for auto companies with facilities in the U.S.
“These plants are absolutely critical to our state economies, employing tens of thousands of our constituents and supporting a critical supply base that amplifies their significance by as much as ten-fold,” the letter signed by the Senate trio said. The letter was sent to Bi-khim Hsiao, Taipei Economic and Cultural representative.
Happy to help, but …
Taiwanese Economic Ministry officials were quick to show their appreciation for the kind thoughts but noted their country’s chip makers not the primary producers of the chips used by automakers.
“But relevant chip manufacturers are fully cooperating with customers from all over the world, responding positively to their related needs, and assisting in resolving the problem of automotive chips,” it said, according to Reuters.
Economy Minister Wang Mei-hua is talking to Taiwan’s chip makers hoping to provide some assistance. They’ve told her they’re “actively” involved in resolving the issue.
“Though the automotive chip industry chain is long and complex, with the full cooperation of our country’s firms, the industry estimates that supply and demand for auto chip production by chip manufacturer should reach a balance in the fourth quarter of this year,” Reuters reported.
Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co. Ltd., one of the major suppliers of chips in the world, said in May the company was scrambling to squeeze out all it can from its existing production network. He said then the industry hoped to meet the current level of demand by the end of July, then focus on catching up on the backlog.
“There’s a time lag. In car chips particularly, the supply chain is long and complex. The supply takes about seven to eight months,” he said.
The impact of the shortage
The trio noted later in the letter, the ability to keep the economy growing is critical to the continued emergence from the pandemic, and the chip shortage hinders the growth of a major sector of the country’s economy: the auto industry.
“In what should be good news for our country’s economic recovery, demand for vehicles — from cars to commercial trucks — is now up, yet the lack of semiconductor chips is preventing this renewed demand from being met,” according to the letter.
“At a time when our manufacturers should be adding extra shifts, they have had to idle U.S. plants or curtail production. The U.S is now the most impacted region in the world.”
They’re not just exercising some hyperbole with that last sentence. Of the 5.96 million vehicles lost thus far, most are from North America at 1.95 million. However, Europe and China aren’t far behind at 1.76 million and 1.22 million, respectively. AFS expects the final tallies to come in at 2.25 million in North America, 2.22 million in Europe and 1.28 million in China.
The total number lost is expected to come in at about 7.1 million vehicles lost for the year and the financial impact is equally massive: $110 billion, according to an earlier report by AlixPartners.