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Shortage underscores semiconductors’ importance to auto industry.

Auto Experts Suggest Remedies for Semiconductor Shortage

Jaspi Sandhu, senior vice president for engineering and R&D at HCL Technologies, says automakers need to learn to work more closely with the semiconductor industry.

Automakers should focus more attention on user experience and worry less about the specific semiconductors they employ as they contend with the ongoing shortage of computer chips, some experts suggest. 

Marios Zenios, CEO of Auto EE Solutions and former vice president of engineering for connected cars at Fiat Chrysler, notes the use of semiconductors in vehicles is steadily rising. New vehicles now use roughly $500 worth of semiconductors, compared with $300 in 2013, he says during a webinar on semiconductors in the auto industry organized by the Center for Automotive Research in Ann Arbor.  

The current value of semiconductors in vehicles and across the industry is expected to double within five years, Zenios says. The $40 billion automakers now spend annually on silicon chips represents only about 10% of the global semiconductor business, he adds. 

The importance of semiconductors to the auto industry is being shaped by electrification, infotainment, ADAS, autonomous driving, the broader use of artificial intelligence and the increasing need for in-vehicle infrastructure communication, Zenios (pictured, below left) says. 

In addition, the auto industry in the U.S. now recalls twice as many vehicles as it builds each year, and 40% of the recalls involve software updates. Over-the-air software updates are becoming increasingly important, he says. 

Marios Zenios screenshot.pngAt the same time, customers don’t want a “computer on wheels” – they want safe, reliable transportation. And while features such as ADAS and 8- to 10-in. (20- to -25-cm) infotainment screens are found in even the least expensive vehicles, automakers would be better off working on improving the overall user experience rather than trying to fix technical issues better left to semiconductor makers. 

Jaspi Sandhu, senior vice president for engineering and R&D at HCL Technologies, an information technology company with offices in 50 countries, says automakers need to learn to work more closely with the semiconductor industry. 

Collaboration and wider use of standardized platforms developed within the chip industry can simplify and expedite product development for automakers, he adds. It also can slow or reverse the proliferation of electronic control units in each vehicle. 

But car companies need to adjust their business models to work more closely with chip makers, Sandhu (pictured, below left) says. 

For example, Sandhu notes the auto industry can tailor its collaboration with chip makers willing to produce the specific kind of technology required in cars and trucks.  

The industry doesn’t need leading-edge semiconductors, but even if they are using chips a couple of generations behind the very latest models used in aerospace, their foundries and packaging companies can devote a larger share of their capacity to automakers and help tweak the chips for maximum performance. 

Closer collaboration with the semiconductor industry also brings more talent to bear on automotive-related problems, Sandhu says, noting his company works with nine of the world’s top automakers and six of the 10 leading Tier 1 suppliers. 

Jaspi Sandhu screenshot.pngZenios adds while companies such as General Motors, Ford and Stellantis discuss insourcing and vertical integration as part of the auto industry’s answer to the semiconductor shortages, automakers still will need the silicon chip industry’s expertise and talent. 

Carla Bailo, president and CEO of the Center for Automotive Research, notes the semiconductor shortage continues to hobble the auto industry, raising prices and slowing its ability to rebuild inventories. 

“Will it ever end?” she asks. 

Zenios acknowledges the shortage could drag on through 2022 and into 2023. He suggests a surplus of semiconductors used in the automotive industry could materialize in the latter part of 2023. 

But the auto industry needs to overhaul its planning and forecasts to ensure they have a better view of the semiconductor business and their own place in the silicon pecking order, he says. 

The COVID-19 pandemic was a once-in-a-century event, Zenios notes. But automakers made flawed forecasts that had demand for new vehicles shrinking dramatically. “They panicked,” he said, leaving them with few options when sales began to recover. 


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