4th May 2021
Hugues Chevalier, Economist
For several months now, a world shortage has hit the semiconductor sector and in particular has paralysed the automotive production. The current shortage is the consequence of the Sino-American trade conflict and obliges Western industries to source only from producers in the OECD and not China. At the same time, the demand for these components has exploded in recent months. Indeed, the health crisis has generated an unprecedented increased demand for PCs , the highest for 10 years (+ 4.8% y/y). In addition, the upturn in activity in the automotive sector has also driven demand for electronic components as vehicles (electric or thermal) are now stuffed with chips. This shortage is not a good news for the activity of subcontractors in Europe and Switzerland. For instance, German manufacturers again announced last week the closing of many plants and partial unemployment of tens of thousands of workers (for example Daimler with nearly 20,000 employees on two German sites). And all automotive manufacturers are affected by this shortage: GM, Ford, Toyota, Nissan, etc., while at the same time demand is increasing, particularly in China and the United States. To overcome this shortage, the four giants that dominate the market (Intel, Samsung, TSMC and SK Hynix) have stepped up production rates and created new production sites. But, China, which imports $ 350 billion worth of semiconductors and locally produces only 15.9% of the chips consumed, is unable to catch up with its technological backwardness, the best Chinese chips still being very far from those produced in Taiwan. The 14th five-year plan provides a stimulus of 1,400 billion yuan to accelerate the production of semiconductors, in order to supply companies such as Huawei which can no longer source on international markets. But so far Chinese efforts have not been a success, and this failure further exacerbates the global shortage.