Semiconductor Scarcity Harms Volkswagen and Other Automotive Companies

From May 7th to May 12th, production at Volkswagen’s Chattanooga Assembly Plant ceased action due to insufficiency with circuitry capacities, and this is because of the global semiconductor shortage. According to Volkswagen spokeswoman, Amanda Plecas, the reason for the German manufacturer’s predicament is “the demand for consumer electronics [and] the recovering automotive markets,” which have resulted in “industry-wide adaptations in automobile production.” 

Of course, Volkswagen is not the only organization affected by the scarcity. BMW, the multinational luxury vehicle manufacturer, had to stop operations at certain locations. Other affected automotive manufacturers include:

  • Nissan
  • Toyota
  • Ford
  • Jaguar Land Rover 

President Joe Biden, with the help of the Democratic Party, recently sought to provide federal stimulus and called upon conservatives to support the deal, too. While this may seem like a positive, industry-leading supply chain specialist, Adebayo Adeleke, notes that the $50 billion plan is not enough to make a real change, and that the cost of real change would be $1.4 trillion in both “investments and government incentives over a decade.” 

One issue is the ever-changing format of technology and the high consumer demand. In addition, the politicisation of technology has played a role, too. Also, the spike in people working from home has contributed to the semiconductor shortage, as computers and tech equipment are needed for many in the era of COVID-19. 

While semiconductor manufacturers are striving to fix this issue, some would argue that it is too late, seeing as many production plants have shut down operations, and the effects will also be felt for some time. 

Source: Supply Chain Brief