Microchip shortage anticipated to last into next year: Auto leaders

·3 min read
A weld curtain hangs between two operators working on the underbody of a Dodge Grand Caravan at FCA?s Windsor Assembly Plant to help maintain social distancing required to slow the spread of coronavirus disease (COVID-19) in Windsor, Ont., on May 8, 2020. Picture taken May 8, 2020.  (FCA/REUTERS - image credit)
A weld curtain hangs between two operators working on the underbody of a Dodge Grand Caravan at FCA?s Windsor Assembly Plant to help maintain social distancing required to slow the spread of coronavirus disease (COVID-19) in Windsor, Ont., on May 8, 2020. Picture taken May 8, 2020. (FCA/REUTERS - image credit)

A global semiconductor shortage, which has led to the equivalent of nearly a year of layoffs for local Stellantis autoworkers, will likely continue into next year, according to some auto industry officials.

The shortage of semiconductors, which are used in electronics and vehicles, has caused several automakers to halt or slow production over the last two years. According to Unifor Local 444, this microchip shortage has led to 44 weeks of cancelled shifts for workers at the Windsor Assembly Plant.

Industry officials have previously told CBC News that semiconductor companies diverted production to consumer electronics during the worst of the COVID-19 slowdown in auto sales in the spring of 2020.

At the time, global automakers were forced to close plants to prevent the spread of COVID-19, but even since those companies have recovered, there still aren't enough chips to meet demand.

While Windsor's auto industry has renewed long-term hope courtesy of several recent announcements, including upgrades to Stellantis's Windsor Assembly Plant and a new electric vehicle battery plant, the sector still has some struggles ahead.

Mike Evans/CBC
Mike Evans/CBC

"We don't foresee [the shortage] relieving until some time next year," chief operating officer of Stellantis North America, Mark Stewart, told reporters Monday after announcing plant upgrades and new research and development centres for Windsor.

"My supply chain teams are on round the clock coverage, fighting the good fight so to speak across our supply base ... to get our allocation of chips so we can keep the plants going."

While Stewart acknowledged the cancelled shifts the company has had to face and frustration from workers, he said their team has seen less down time compared to competitors.

He credited that to the effort from workers and demand in the market — which is allowing their plants to continue to receive a supply of chips.

Flavio Volpe, the president of the Auto Parts Manufacturers' Association, told CBC News that he's hopeful more semi-conductor companies will start production soon.

He said he's heard from analysts that the second half of the year looks like a return to usual semiconductor volumes and that by early 2023, supply will be up to where it needs to be.

CBC News
CBC News

Shortage an opportunity for Canada to invest

And while both auto leaders estimated an end date to the shortage, a member of Canada's Semiconductor Council, Melissa Chee, told CBC News she can't estimate an end date — but notes that the industry is cyclical.

She also said both the government and private industry can use this moment as an opportunity.

"I believe that semiconductor technology is an infrastructure ... so you need to make sure you have all the assets that you need to support that kind of semiconductor ecosystem," she said.

"We know that the semiconductor sector, not just in terms of the design, but in terms of the innovation that goes around and the material, in terms of how you get more out of existing technology, in terms of innovations around the manufacturing process, all of those assets actually reside here."

She said Canada needs to take a supply chain approach when it comes to semiconductors, which is already starting to happen, as earlier this year, the federal government dedicated funding to microchip development.

"There's a real opportunity, as we look forward, about how to create a more sustainable, green economy and dealing with some of the larger challenges around climate change, those are all going to be driven by semiconductor technology," she said.

"It's very invisible to the average Canadian, but it becomes very visible when you can't get something that you need, like a car, so I think this is a really great opportunity for Canada to rally around a technology sector that is very essential."

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