Supply constraints of automotive electronics are causing crippling effects on the industry as the massive demand growth continues to outpace supply. Several original equipment manufacturers (OEM) have ran out of critical parts, fuelling a rise in discussions around supply and shortages – with mentions of ‘supply constraints’ reaching a near 65% rise quarter-on-quarter during Q1 2021, according to the filing analytics platform by leading data company GlobalData.

Ford, Daimler, General Motors, Volkswagen have seen production disruptions due to the supply issues.

David Leggett, Automotive Analyst at GlobalData predicts that the shortage to last well into 2022*.

Leggett, comments: “The continuing shortage of critical components will likely continue to cause disruption to vehicle manufacturing programs. Automotive companies will be working hard to work around shortages and reduce such supply chain risks but adding sufficient capacity in semiconductor supply is beginning to emerge as much more than a short-term difficulty.”

Rinaldo Pereira, Senior Business Fundamentals Analyst at GlobalData, notes: “Chinese component manufacturers seem to be stockpiling chips and electronics due to rising sanctions from the West. ‘Regulation’ and ‘Geopolitics’ are top earnings transcript themes for Asia-Pacific (APAC) component manufacturers in 2021.

“The auto sector’s average sentiment score was relatively stable in Q2 2021** compared to Q1 2021. In contrast, sentiments for APAC component manufacturers were down by 13% in the same period.

“Imminent fixes to supply constraints seem unlikely due to the resurgent demand and sanctions on Chinese component manufacturers. The situation is likely to get more serious. Ford, General Motors and Honda have suggested that stagnant production lines are likely to impact 2021 earnings severely. For filings released till date in 2021, keywords such as ‘Loss’ and ‘Cost’ were top of the list for the auto sector.”

* Chips shortage for autos likely to last into 2022, says GlobalData