The semiconductor chip shortage has slammed the auto industry. Automakers have trimmed their production plans across the globe by millions of vehicles, costing them more than $200 billion in lost sales in 2021.
How did we get here? It comes down to a convergence of factors, including the significant use of semiconductor chips in modern automobiles, surging demand for chips across various industries and the impact of the COVID-19 pandemic on automotive and semiconductor production and logistics.
At this point, you might ask: Why don't automakers just substitute other chips for the ones they can't get? For starters, many of the other automotive-certified chips are also in short supply. And, even if other chips were available — replacing one chip with another is often difficult.
Modern vehicles can contain over 1,000 chips in up to 150 electronic control units, which manage vehicle functions ranging from drivetrain to braking to power windows. Most of these control units are extremely cost-optimized, with just enough processor, memory and storage for their intended functions. The software running in these control units is optimized for the chips used — to minimize code size and CPU load. Updating this software to run on other chips and validating the solution can be difficult and time-consuming.