The chips shortage continues to pressure industry and presents a significant to existential challenge for automotive suppliers, highlighting the need for a dedicated semiconductor strategy and tangible action from policymakers.
European automotive suppliers welcome the European Commission’s initiative for an EU Chips Act, due to be published 8 February, and present four concrete actions to make the EU’s semiconductor strategy a success.
During 2021, the global production of 9.5 million vehicles was delayed due to a shortage of semiconductor chips. Although this year could show a modest recovery of global light vehicle production, supplier and market estimates still forecast, on average, production losses of 4 to 6 million vehicles.
The EU’s automotive industry is disproportionately affected by the current semiconductor shortage. One out of every four cars that wasn’t able to be produced last year due to the shortage, would have been produced in the EU. As a result, the EU’s share in global light vehicle production dropped from 18.6% in 2019 to 15.8% in 2021. production.
Further to light vehicle production, disruptions in the production of trucks threatens essential areas of EU supply chains. Automotive is responsible for 37% of the demand for semiconductors in Europe, compared to 10% globally, highlighting that a successful strategy to foster a strong European industry for microelectronics should build on a central role for automotive suppliers.
The ongoing shortage highlights the need for a coordinated industrial and innovation EU policy that allocates substantial public investment and creates the right conditions for private investments to strengthen the semiconductor ecosystem and increase production capacity. CLEPA, the European Association of Automotive Suppliers, supports the EU’s commitment to adopt an EU Chips Act, but stresses the need for substantial investment beyond the commitment made so far.
Where other regions have pushed ahead with comprehensive semiconductor investment plans, policy initiatives and investment commitments by EU governments are significantly smaller and lack in coordination and focus. If the EU takes too long to provide clarity on the investment framework, companies interested to invest in the EU, may instead look elsewhere, and there are signs that this is already happening.
Raising the perspective of the supply industry and contributing to this milestone for a successful chips strategy, CLEPA has published a policy guide for an ecosystem approach that invests in R&D and manufacturing capabilities, but also leverages the advantages of the automotive sector and facilitates developments in semiconductor application technologies, such as connected and autonomous mobility.
The EU Chips Act should combine substantial public investment and improvement of investment conditions within the single market with a commitment to facilitate global trade and private investment.
