Volkswagen CEO warns chip shortage could last for years

(Volkswagen/Disclosure)

First, automakers thought the worst of the chip crisis would occur in the first half. Then in the third trimester. Now, leaders of German vehicle makers are further delaying projections about when the lack of semiconductors will no longer limit production.

“Possibly we will continue to be in short supply in the coming months or even years because semiconductors are in high demand,” Volkswagen CEO Herbert Diess said in an interview on Monday with Bloomberg Television. “The internet of things is growing, and increasing capacity will take time. It will probably be a bottleneck for the coming months and years.”

Diess and Daimler CEO Ola Kallenius and BMW CEO Oliver Zipse voiced their concerns during the first auto show since the start of the pandemic, which was attended by most European automakers in Munich.

On Sunday, Kallenius warned that the semiconductor shortage might not disappear entirely next year and take until 2023 to resolve. Zipse said the crisis could last from six to 12 months.

Volkswagen and Mercedes are among the automakers hit this quarter by factory closures in Malaysia, which in recent years has become a major chip testing and packaging hub. Large chip suppliers such as Infineon Technologies, NXP Semiconductors and STMicroelectronics operate factories in the country.

There is hope that the situation will start to improve in the fourth quarter, said Daimler’s Kallenius, although he warned of problems caused by “structural” demand issues that will also influence sectors in 2022. A Japanese chip maker supplier to Toyota also said in last month that the supply crisis could extend over the next year.

The global auto industry will need approximately 10% more chip production capacity, said Murat Aksel, Volkswagen purchasing director, in a conversation with reporters on Sunday. Diess said on Monday that Volkswagen hopes to overcome the problems caused by the Covid-19 outbreak in Malaysia “at the end of this month, probably next month, and then recover in the last quarter of this year.”

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