BMW Not Worried About Global Chip Shortage

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He says the shortage should be resolved within the next two years.

As you are probably aware, the numerous lockdowns in multiple countries across the globe in response to the pandemic caused a great many people to stay home and stock up on gadgets and games. As a result, the world is currently facing a shortage of semiconductor chips, and the auto industry is being affected heavily. GM hasn't got enough trucks to meet demand and Volkswagen is working on designing its own chips. Some manufacturers aren't stressed yet, like Toyota which has a stockpile of the hot commodity. Another is BMW, whose CEO Oliver Zipse has said that everything should return to a manageable balance in two years at the latest.

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"There's intense focus on the issue globally, so it's expected for supply and demand to be back in balance within two years at the latest," Zipse said in an interview this week at the BMW driving academy near Munich. While the likes of Ford have estimated that the scarcity of semiconductors will heavily affect earnings (the Blue Oval estimates it will lose $2.5 billion this year), BMW seems to be relatively comfortable and has only reported limited stoppages at two of its European plants so far. Meanwhile, Renault's CEO has called the situation "frightening" and Volkswagen AG predicts that the shortage will get worse this quarter.

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However, Zipse's positive outlook has reasoning behind it - the European Commission plans to double its chip production to at least a fifth of the world's supply by 2030, President Biden has promised to secure American supply by reviving domestic chip manufacturing, and Taiwan Semiconductor Manufacturing Co. plans to spend as much as $28 billion on new plants and equipment this year. "From our point of view, we've covered the necessary supplies with long-term contracts," said Zipse. The alternative is to strip some high-tech features from certain models like the 5 Series. We hope he's right - modern cars' reliance on semiconductors is expected to increase by at least five percent before the end of the decade.

Source Credits: Bloomberg

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