The automotive industry has finally started to recover from the long-standing semiconductor shortage, according to a recent study conducted by S&P Global Mobility. The shortage, which began during the COVID-19 pandemic, caused significant disruptions in the production of light-duty vehicles, resulting in an estimated loss of over 9.5 million units in 2021 alone. The third quarter of 2021 was particularly hard-hit, with an estimated volume loss of 3.5 million units.

However, there is good news on the horizon. The study reveals that the impacts of the shortage have gradually lessened throughout 2022, with an estimated loss of 3 million units for the entire year. This positive trend has continued into 2023, as semiconductor supplies have improved significantly. In the first six months of this year, the industry only lost approximately 524,000 units due to the shortage.

Mark Fulthorpe, the executive director of global light-vehicle production at S&P Global Mobility, explains that the industry has now adapted to the constrained supply and is much less likely to be hit by significant disruptions. He states, “We’ve moved from obvious disruption, clearly visible at the automaker and plant level, to a stage where we know constraint remains, but it is impossible to identify.” With the current levels of semiconductor supply, the study estimates that global light-vehicle production could reach 22 million units per quarter.

While this is undoubtedly positive news for the automotive industry, the study also highlights some challenges that still lie ahead. Demand for certain types of semiconductors continues to exceed supply, particularly in the context of modern-day light-duty vehicles. Although demand for chips from consumer electronics has dropped, the automotive industry’s need for semiconductors is steadily increasing.

Before the pandemic and the semiconductor shortage, S&P Global Mobility had predicted that global sales and production of light-duty vehicles could surpass 100 million units annually as early as 2022, following a peak of 94.1 million units in 2018. However, analysts now believe that the industry will not fully recover to 2018 levels until 2028. Moreover, it is projected that new car sales will not exceed 100 million in a calendar year until after 2030.

In light of these projections, it is clear that the semiconductor shortage has had a profound and lasting impact on the automotive industry. The shortage has not only disrupted production but also delayed the industry’s growth trajectory. Automakers and suppliers have had to adapt to the constrained supply, implementing strategies to mitigate the effects of the shortage and ensure a steady flow of semiconductors.

Looking ahead, it is crucial for the automotive industry to continue working closely with semiconductor manufacturers and suppliers to address the ongoing challenges. Collaboration and innovation will be key in finding solutions to meet the increasing demand for semiconductors in modern vehicles. Additionally, diversifying the supply chain and exploring alternative sources of semiconductors could help mitigate future disruptions.

In conclusion, the semiconductor shortage in the automotive industry has started to subside, with improvements in semiconductor supplies observed throughout 2022 and 2023. However, challenges still remain, as demand for certain types of semiconductors continues to exceed supply. The industry must adapt and innovate to ensure a steady flow of semiconductors and address the growing demand in modern vehicles. By doing so, the automotive industry can overcome the impact of the shortage and resume its growth trajectory in the coming years.