The production of automotive chips is in a critical situation, affecting ESP and ECU

On December 6, in response to rumors that Volkswagen is facing production suspension in China due to chip shortages, a relevant person in charge of Volkswagen Group (China) (hereinafter referred to as "Volkswagen China") told a reporter from Beijing Business Daily that the uncertainty brought about by the new coronavirus epidemic has affected the chip supply of some specific automotive electronic components, and the full recovery of the Chinese market has further driven demand growth, making the situation more severe and causing some automobile production to face the risk of interruption.

Earlier, there were reports that due to insufficient chip supply, Volkswagen's two vehicle manufacturers in China, FAW-Volkswagen and SAIC Volkswagen, began to suspend production. Among them, FAW-Volkswagen had already stopped production in early December, and SAIC Volkswagen began to suspend production on December 4. The shortage of automotive chips will cause the ESP (electronic stability program system) and ECU (electronic control unit), i.e. the two major modules of the vehicle computer, to be unable to be produced.

Data released by the Passenger Car Market Information Joint Committee showed that in the first 10 months of this year, FAW-Volkswagen's cumulative sales were 2.1094 million vehicles, with a market share of 10.6%, ranking first in the domestic passenger car manufacturer sales list; SAIC Volkswagen's cumulative sales were 1.49 million vehicles, with a market share of 7.5%, ranking second in the domestic passenger car manufacturer sales list.

Regarding the impact of the production suspension, a relevant person in charge of Volkswagen China told the Beijing Business Daily reporter, "We are closely monitoring the development of the situation, and have already started coordination with the headquarters and relevant suppliers to actively take countermeasures. At present, customer deliveries of relevant vehicles have not been affected."

FAW-Volkswagen also responded to the media that the production of new cars has indeed been affected to a certain extent. The company is currently communicating with relevant suppliers, but there has been no complete suspension of production as rumored. SAIC Volkswagen also told the media that the global chip market supply problem is not a sudden event and the company has been prepared for it. SAIC Volkswagen's annual procurement volume is planned, and there will be no situation where sudden inventory problems will lead to suspension of production.

Zhang Xiang, a senior automotive industry analyst, said that due to the impact of the new coronavirus epidemic, the global chip supply and allocation have encountered certain difficulties. This is a global problem that affects not only the two Volkswagen North and South, but also the scope of impact is not limited to the automotive industry.

In fact, the global chip shortage has already shown signs. It is understood that in late January this year, domestic automobile industry chain companies began to suspend production, and most production was gradually resumed in April; overseas automobile industry chain companies only began to suspend production in March, and the "time difference" of suspension of production delayed the emergence of chip supply problems.

Recently, a price increase letter from NXP, the leading automotive chip manufacturer, showed that due to the impact of the new coronavirus epidemic, NXP was facing a severe shortage of products and increased raw material costs, and decided to raise product prices across the board. There are also reports that Japanese company Renesas will adjust the prices of power management ICs and other products from January 1 next year.

With the improvement of automobile electrification and intelligence, the importance of semiconductor chips in the automobile manufacturing industry has become more prominent. Data shows that semiconductor chips are widely used in multimedia entertainment systems, smart keys, automatic parking systems, engine and transmission control systems, driver assistance systems, electric power steering, electronic stability systems, tire pressure control, electric windows and other automotive parts.