Germany has asked Taiwan to persuade its local manufacturers to help ease a shortage of semiconductors in the automobile sector, Reuters reported on Sunday.
German Economy Minister Peter Altmaier asked his Taiwanese counterpart Wang Mei-hua to address the issue in talks with TSMC, the world’s largest contract chip maker and one of Germany’s main suppliers, the report said.
“I would be pleased if you could take on this matter and underline the importance of additional semiconductor capacities for the German automotive industry to TSMC,” Altmaier wrote, according to Reuters. Taiwan’s Ministry of Economic Affairs said it has received requests through diplomatic channels to help ease a shortage of chips for the auto sector, although it was not aware of Altmaier’s letter.
The ministry said it had begun talks with domestic chip suppliers in response to requests from other countries and asked them to provide full assistance.
TSMC, in a statement, said the issue of chips shortages for automobile companies was very important to them. “It is our top priority, and TSMC is working closely with our automotive customers to resolve the capacity support issues,” it said, according to Reuters.
The global automobile industry has been facing difficult since the second half of 2020 from a shortage of semiconductors. In December, Volkswagen had said will produce around 100,000 vehicles in the first quarter of 2021 than what it initially planned. Ford has temporary shutdown its factory in Germany, which will last until February 19 as well as its factory in Louisville in the US. Fiat Chrysler Automobile has suspended production in its factories in Canada and Mexico. Toyota is planning manufacture less cars at its factory in Texas.
Germany isn’t the only country being asked by its automobile industry help ease with the shortage. American Automotive Policy Council (AAPC), a lobbying organization for Ford, GM, and the US operations of Stellantis, is already applying pressure to the US Commerce Department to appeal to Asian semiconductor makers to reallocate chip production from consumer electronic devices to vehicles, according to Bloomberg. European Union has also reportedly asked Taiwan for help. The Korea Automobile Manufacturers Association held an emergency conference last week over the matter.
The shortage in semiconductor for automobiles has been caused in large part by the COVID-19 pandemic. The semiconductor reduced its production capacity for automobile semiconductors in anticipation of car shipment decreasing from the resurgence of the pandemic last year. They have shifted their production capacity to chips for 5G and gaming. But the automobile industry has recovered faster than anticipated, starting with the third quarter of 2020.
NXP, Infineon, Renasas, Texas Instrument, STMicroelectronics, Bosch and ON Semiconductor produces semiconductors for automobiles. These companies use contract chip makers such as TSMC, GlobalFounderies and UMC for some of their production.
The shortage has also caused companies such as NXP, STMicroelectronics and Renasas to tell automobile companies that they are increasing their chip prices by 10% to 20%. This is likely from contract chip makers asking for higher price for their services to these chip companies.
The shortage will likely not be eased in the short term. Automobile chips accounted for only 3% of TSMC’s fourth quarter sales in 2020. Companies such as Qualcomm, Apple, Broadcom, AMD and Nvidia are bigger customers for the Taiwanese chip giant. According to Song Sun-jae, an analyst at Hana Financial Investment, though TSMC said it will prioritize automobile semiconductors, its orders from its US fabless customer is solid and is taking up a lot of its production capacity. Song anticipates that the shortage won’t be solved quickly.