Automotive sector chip shortage woes may be bigger than expected – BASF CEO

LONDON (ICIS)–The impact of the semiconductor chip shortage on automotive production could be even greater than expected, BASF CEO Martin Brudermuller said on Wednesday, with supply times from car makers continuing to lengthen.

Automotive production has been stifled by a lack of semiconductor chips, due to capacity limits and chip makers pivoting towards prioritising other sectors such as consumer electronics in the wake of the collapse in vehicle demand  in the early days of  the pandemic.

Below-target vehicle production has also had an effect on chemicals players, as the automotive sector is a key end-market with plastics, resins, solvents, coating and specialty chemicals.

Semiconductor buyers such as Intel have projected that the shortages may remain through to 2023, as new capacity comes onstream.

But the situation may be more difficult for the automotive sector than anticipated, according to Brudermuller.

“Semiconductors have a problem, I think here the problem is bigger than assumed,” he said, speaking at a press conference from Ludwigshafen.

“I already thought at a very early  point in time that this will have a long-term effect.”

“You see supply times from automotive manufacturers are becoming longer, and we see, for example in the US, that we have a historic low in ready vehicles,” he added.

Electric vehicle demand growth is currently outstripping that of conventional vehicles, particularly in the US and Europe.

BASF has made significant bets in the sector, with battery materials production capacity across most of the key regions of the world.

Demand growth also presents opportunities for other BASF products such as coolants and general automotive components.

Growth in demand for two different parts of the automotive sector at a time of entrenched shortages could stand to exacerbate the capacity woes that automotive producers are currently experiencing, he added.

“In terms of e-mobility… automotive manufacturers want to come to grips from the transition from the combustion engine to e-mobility faster … If you have both, and no full capacity utilisation in both areas, you have a problem,” he added.

Front page picture: Cars at a General Motors assembly plant in the US which earlier in the year had to cut output due to semiconductor shortages
Source: Jeff Roberson/AP/Shutterstock