Remunerator News

Sep 30 2021

The Global Semi-Conductor Shortage Explained

If you’re in the market for a new car, chances are you’ve heard about the global semi-conductor shortage.

This is causing a headache for manufacturers, dealers, and car buyers all over the world.

What is a semi-conductor?

Essentially, a semi-conductor is a microchip that is used in everything from cars, computers, mobile phones to televisions.

As the name suggests, it is a tiny piece of technology that partially conducts a current. These chips can take months to manufacture from start to finish. They are fundamental to powering the technology within your car.

Why is there a shortage?

Over the past 18 months, the way the world operates has changed drastically. As stated above, semi-conductors are used in almost every piece of technology.

The shift to people working from home has led to an increase in demand for hardware such as laptops, monitors and phones. Unfortunately, the supply hasn’t managed to keep up with this demand.

There has also been a change in the way factories operate. In an effort to reduce the spread of COVID-19, semi-conductor manufacturing plants have had to reduce their working capacities and operate under strict shift working conditions. This means the output has reduced over the past year and a half.

In addition to this, a fire occurred at one of the biggest semi-conductor factories in Japan ceasing production for a month.

How does this affect the car industry?

In early 2020, many car brands anticipated a reduction in car sales as a direct result of the pandemic. People’s transport preferences shifted to personal car ownership to avoid public transport resulting in the opposite occurring.

The car industry is a relatively small customer of semi-conductors, when you compare them to the likes of Apple and Samsung, and therefore are not given priority. Manufacturers can only build so many cars as they have semi-conductors for, with a limited number of components available, there has been a reduction in total number of cars built.

Every car brand has suffered from the shortage, as new cars can require thousands of these chips. The total number of cars they can manufacture has reduced causing extensive delays on new car orders. Some brands have removed technology in cars all together to meet demand.

As of mid-2021, the car industry has suffered losses of more than $141bn.

Is there an end in sight?

Yes!

Industry experts predict that supply will return to pre-pandemic levels in mid to late 2022.

Governments around the globe are taking steps towards resolving the shortage.

US President, Joe Biden, has stated that the US needs to secure its supply of semi-conductors and has announced plans to invest $50 billion into US semiconductor production.

German Chancellor, Angela Merkel, is also investigating how Germany can find solutions for the shortage.

How can I get a car in the meantime?

You can still purchase a new (or used) car! There is still plenty of stock in Australia, you just have to know where to find it.

Remunerator can source your new car for you.

To simplify your car search, Remunerator have reached out to dealers across Australia to find almost every car in stock and available right now. We have thousands of new, demo and used cars available for purchase on a novated lease.

Are you ready for your new car? Skip the wait time by talking to a novated leasing specialist today on 1800 501 703 or email novated@remunerator.com.au