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By this point, it should be obvious to everyone that 2021 is just the fallout of 2020. Things aren’t magically better, and during the year of a pandemic and quarantine, Amazon probably became rich enough to own a planet. Consumer goods and devices soared, especially with comfort shoppers who buy electronics to take their mind off of the world outside. This, of course, put the auto industry in an odd place. Not only were people not buying new cars, but now a precious resource is missing from production – the semiconductor chip. The response from the supplier – evolve.
Yes, it’s the third report on the semiconductor chip shortage and its effects on the auto industry today. By the end of this article, we may be thinking about what the next jump in automobiles may look like. We’re going to get a little technical, but stay with me here, because this is really some interesting stuff going on in the industry. Okay – semiconductor chips play a large part in many electronics, and our first semiconductor chip report and second semiconductor chip reports discussed their many uses in various industries, and how some automakers have had to cut production or remove certain features to continue production.
These chips play a part in automotive transistors, a device with three connections used to amplify or switch electronic signals or electrical power. Electronic braking, airbag control, many automatic safety features, and amenities like infotainment systems, all rely on transistors to function correctly. Dozens of semiconductor chips employ these transistors, and these devices are anywhere from 45 to 90 nanometers in size. Believe it or not, that’s too large! When compared to the technology today, a transistor between 45-90nm was once suitable for the first Apple iPhone. Today, it’s not even good enough for the latest smartphone.
Automakers are trying to make vehicles more connected, more technologically advanced, and more like a smartphone on wheels. However, the idea of smaller and more powerful technology has always been a problem with the automotive industry. Look at how long it’s taken some automakers to finally join the era of hybrid and electric vehicles (EVs). Some automakers needed to be threatened with being shut down to get the message. It’s always been a “if it isn’t broken, why fix it?” mentality, and now the ways of old aren’t working anymore.
Intel chief executive Pat Gelsinger has been getting many requests from automakers to invest into increasing the production capacity for these older versions of semiconductor chips only one industry still uses. During the pandemic, chipmakers reallocated their production capacity to where the money was – consumer goods. Now automakers want them to work in full force for the auto industry and sink funds into an old product.
“I’ll make them as many Intel 16 [nanometer] chips as they want…It just makes no economic or strategic sense…Rather than spending billions on new ‘old’ fabs, let’s spend millions to help migrate designs to modern ones.” - Intel chief executive Pat Gelsinger told Fortune during his visit to an auto industry trade show in Germany
The fight many automakers are making is reliability. These transistors that they have been using have proven to work and work well. They need to be able to function regardless of temperature, humidity, vibrations, and even minor road debris. With all of those conditions, a product that already handles all of it in stride is the obvious choice versus taking a gamble on a new and improved concept ripe for testing. It’s basically a tug of war, at this point, and automakers are currently losing ground.
“Because of a 50-cent chip, we are unable to build a car that sells for $50,000,” said Murat Aksel, head of procurement for Volkswagen Group, during a press briefing in Munich
If automakers switch to the new tech and follow the pattern of miniaturization, what could the next concepts look like? Stay up to date with the semiconductor crunch when you follow us on NowCar social media.