Thought Leadership February 2021: What’s driving the global chip shortage?

Huawei chip hoarding has created a global shortage that likely left automakers and high-tech industry in the lurch and that could have severe damage to swedish exports and economical growth.

Carmakers are raising a ruckus. Just as demand for autos was beginning to pick up again, global automakers like Ford, Fiat-Chrysler, Toyota, Subaru, Volkswagen, and Nissan have been forced to slam on the brakes, laying off autoworkers and shuttering factories. In Sweden both Volvo and Scania already and high-tech industry soon will need to adjust to shortage in chip.

The real problem: There aren’t enough chips to supply the auto industry. There’s a global shortage.

The reason for this shortage depends on who you ask. Most media reports would have you believe it’s the result of the pandemic. Grumbling automakers blame poor planning by auto parts suppliers, which are responsible for preordering chips and integrating them into parts to fulfill automakers’ orders. “We expected a very strong recovery after the summer and we expressed that quite clearly to our tier-one suppliers,” Audi’s procurement chief, Dirk Grosse-Loheide, told the Wall Street Journal. In other words, automakers put in the orders.

An ABC News article cited “industry officials” who stated that “semiconductor companies diverted production to consumer electronics during the worst of the COVID-19 slowdown in auto sales last spring.” In other words, it wasn’t poor planning on the part of auto parts manufacturers. There just aren’t enough chips to go around because of increased demand for consumer devices. We believe that the truth, though, has much more to do with global trade and the unforeseen consequences of China-US chip wars.

In a nutshell, Huawei stockpiled more than 2 million 7-nanometer chips ahead of a September 15 ban on chip sales to Chinese companies. A few months later, there’s suddenly a chip shortage that no one seems to have been able to see coming. Coincidence? Perhaps not.