​​What is a semiconductor?

A semiconductor or microchip is an integral component in almost all electrical devices. Everything from an electric toothbrush to an Airbus features a mass of semiconductors that control the behaviour of the product. A modern car, whether it is electric or piston-powered, can have up to 3,000 semiconductors in its various powertrain, infotainment and control systems. 

Why is there a shortage?

Until the pandemic, the supply of semiconductors was manageable. When the pandemic hit, demand for items such as laptops, tablets and home printers rocketed. At the same time, demand for cars crashed as dealerships across the world were forced to close their doors. Car plants were also shuttered as workers were ordered to stay at home. 

Due to the nature of the automotive supply industry, which operates on an ‘on demand’ or ‘just in time’ supply system, semiconductor deliveries were diverted to the electronics companies. And, just like the toilet roll shortages of 2020, many manufacturers sought to secure production by snapping up any additional supply. 

As a result, when car manufacturing resumed at full speed, semiconductors had become a rare commodity. To compound the issue, in March 2021 a fire at one of the world’s biggest semiconductor factories – run by Renesas in Japan - severely restricted global supply. The plant was responsible for supplying Toyota, Nissan and Honda and is only now starting to produce semiconductors in large numbers. 

How bad is it and when will the situation improve?

Toyota, Stellantis, Ford, Nissan, BMW and Renault, have all been forced to reduce production volumes in recent months as they struggle to secure enough semiconductors. Earlier this month, JLR said that it expected the chip shortage to continue throughout this year. 

When will it improve? Here's the bad news. Even the most optimistic of industry supply experts expects shortages to continue for at least the next six months. Some reckon we could be well into next year before production hits pre-pandemic levels and waiting lists start to drop. 

A typical modern car contains around 3,000 of these. And they're currently in very short supply...