How the semiconductor shortage is affecting the automotive sector
Just a few years ago, we were talking about the talent shortage within the semiconductor sector.
Today, we are talking about a very different, but just as damaging, shortage – the semiconductors themselves.
- Ford shut its Germany-based factory for a month
- Volkswagen declared they would build 100,000 fewer cars
- Honda UK shut down for several days
These are just some of the realities of a silicone chips (semiconductor) shortage.
The automotive sector isn’t the only industry being hit. Still, it is largely feeling the impact due to its reliance on the chips to operate power windows, airbags, dashboard displays, catalytic converters and, of course, for electrification.
Why is there a semiconductor shortage?
The silicone chips shortage in the automotive sector is the result of multiple factors, including the pandemic, geopolitical disagreements, factory and plant fires, and freight constraints:
When COVID-19 hit, a drop in sales led to many vehicle manufacturers reducing their orders.
This meant the companies that usually supplied them with their silicone chips moved on to other customer bases such as the electronic and IT sectors.
When automotive demand began to recover, manufacturers were effectively put to the back of the queue; as semiconductors manufactured for video games and 5G smartphones yield higher profit margins than those utilised in vehicle manufacturing.
Geopolitics also played a role, particularly for US and China-based companies. When the Trump Administration tightened semiconductor sales regulations to ZTE, Huawei Technologies and more, these firms began stockpiling in response.
China’s Semiconductor Manufacturing International Corporation also cut off US firms.
Two fires in Japan added to the disruption, particularly for the automotive sector, as one of the factories was manufacturing advanced sensing devices.
Finally, global transportation constraints have contributed to the shortage. Not only is ocean freight struggling to leave ports in China to deliver the chips, but a lack of shipping containers means manufacturers are forced to pay premiums.
It doesn’t look great for airfreight systems either, as vaccine delivery naturally takes precedence, and a shortage in passenger travel is further reducing freight opportunities. The volume of connected and unconnected circumstances has resulted in a shortage of semiconductor chips, meaning that automotive sales will likely be even lower than what was predicted in response to the pandemic.
What’s being done?
In a letter directly to President Biden, groups from the automotive, telecommunications, healthcare sectors and more called on the government to ‘reinvigorate semiconductor manufacturing in the US’
Jen Psaki, the Whitehouse Press Secretary, stated in February that Biden plans to take on a comprehensive review of supply chains and critical goods.
But when it comes to a plan to help the automotive industry and others, not much can be done presently.
That’s because the construction of new factories, which seems to be the apparent solution, requires billions of dollars and many years to construct.
Currently, US silicone chip factories host a mere 12% of global semiconductor manufacturing, and the lead time for manufacturing a semiconductor chip can be up to 26 weeks.
It isn’t all doom and gloom, though. While there may be little short-term gains, some will eventually benefit from the current silicon chip shortage.
Who benefits from the semiconductor shortage?
UK chip manufacturers: The UK’s largest chip factory, Newport Wafer Fab, is looking to cash in on the shortage, using the funding to increase the number of chip wafers it makes from 8,000 to 14,000. This will be particularly advantageous if automotive manufacturers move their orders to UK-based businesses, which aren’t involved in the geopolitical disputes mentioned earlier.
US chip manufacturers: While US-based auto manufacturers will continue to struggle in the short-term, the shortage has called to light the need to build more semiconductor factories ‘at home’.
Semiconductor job seekers: Whether within the automotive industry or another industry that is reaping the benefits of silicon chip production, skilled job-seekers will undoubtedly see even more opportunities arise later down the line.
Looking for a used motorcycle – where to start?
When searching for a used motorcycle in the off-season, riders face a dilemma – where do you start? Social media marketplaces? Classified ads? Local dealerships? While it’s possible to get a good deal in any of these places, they all have their own pros and cons.
A professional’s advice may be critically important
Dealerships usually have a wide selection of used motorcycles and may even offer a warranty for some models. However, used motorcycle businesses mainly focus on newer, more expensive models, which may not be ideal for those looking for a first motorcycle. With that said, beginners often value dealerships because they offer more transparency than private sellers and even share valuable professional advice.
“A dealership may be the perfect place to look for motorcycles for beginners because their employees know the pros and cons of bikes they sell. Businesses that care about their reputation will provide sincere help and support for buyers who aren’t entirely sure what they want to buy,” explains Matas Buzelis, the Head of Communications at carVertical.
An option for riders trying to save a penny
If a rider doesn’t know what kind of motorcycle they want, a used motorcycle lot may be the answer. They offer affordable prices, and buyers can take a look at various motorcycles in one place.
However, buying a ride in a lot carries some risks, as it can be hard to evaluate its condition. Scams in the used motorcycle market are common and taking precautions is necessary. Checking a motorcycle’s history online is a good way to learn about its past damages and mileage rollbacks, helping to avoid bad deals.
If a motorcycle has suffered severe damage in the past, it’s best to skip such a deal, as it can be unsafe to drive.
Facebook marketplace: the Wild West of internet shopping
One can find anything from second-hand books to cars, motorcycles, and other vehicles on Facebook Marketplace. However, it’s also where buyers are the most likely to get scammed. Facebook Marketplace is full of fake accounts, and there’s no control over listings, so it’s important to be extremely careful when buying anything.
If somebody is selling an expensive motorcycle at a low price, it should be a red flag. Scammers often ask to wire them a reservation fee or pay the total amount in advance, which is a huge no-no. Facebook Marketplace is also full of cyber criminals who may hack any device and leave naive buyers penniless.
It’s best to meet a seller in person, carefully check all of the motorcycle’s documents, and inspect its vehicle history report to mitigate risks.
Online classifieds offer the widest selection
Online classifieds have the widest selection of listings, as both private sellers and businesses post their ads. Since most online classifieds websites perform at least some kind of user identification, it’s a safer option than Facebook Marketplace.
It’s best to buy a used motorcycle from an owner who has had it for several years. Such an owner will know more or less everything about their motorcycle and its maintenance, making it easier to plan future expenses. However, some private sellers buy and resell motorcycles – these sellers may not be as sincere about their true condition.
“There are two things buyers need to look for: a good motorcycle and an honest seller. Buyers should look for a well-preserved model which is being sold by its actual owner. It’s better to avoid buying a motorcycle from someone seeking to make a profit, as they may hide defects, mileage rollbacks, and other things,” explains Buzelis.
The year of the app: five transport predictions for 2023
Peter O’Driscoll, Managing Director, RingGo
In 2009 Apple trademarked the phrase “There’s an app for that” to showcase the growth of app availability on its iOS app marketplace. Since then, the app boom has revolutionised lifestyles and, over the space of a decade, apps have become commonplace and vital for daily functions, with downloadable technology on smartphones intrinsic to leisure, business, retail, and transport services.
Drilling down into transport, we can see that sweeping changes in app culture are impacting the way we travel. Traditionally transport has been commodity-based: you purchase a car to go from A to B. Now apps enable the servitisation of mobility, with solutions facilitating everything from e-mobility and ride-sharing, to practical features such as mapping, locating charging points, and paying for parking, all underpinned by data networks and simplified user experience.
Looking further ahead to 2027, Gartner predicts more than 50% of the global population will be daily active users of multiple super apps. These are platforms ‘like a Swiss army knife’ that house a variety of services in one ecosystem, deploying modular micro-apps for a personalised experience. With super apps, tapping on one icon will manage multiple aspects of your day, and the acceleration towards this new era of app technology demonstrates how deep the impact of apps has been so far.
With apps in mind, I am looking at the next 12 months to predict the ways transport will change for the better, the ways automation and technology will improve lives, and how apps will play an integral role in radically shifting the needle toward enhanced mobility.
- Smartphone technology will be engineered with all demographics in mind
Despite preconceptions of ageism, technology-enabled solutions are used by all types of drivers, with demographics across the nation taking advantage of technology’s benefits to convenience. Focusing specifically on the elderly, 9 in 10 (86%) UK pensioners believe smartphones make their lives significantly better according to OnePoll.
Almost two-thirds (64%) believed their depiction in media was either negative or ambivalent, while almost half (45%) have been made to feel frustrated (37%), silly (29%), or angry (27%) by younger people patronising their ability to use their phone. With this in mind, in 2023 I predict that more companies will take an inclusive approach when it comes to engineering technology for smartphones. This will involve ensuring that solutions cater to their needs with three user experience points in mind: accessibility, functionality, and mobility.
When planning journeys from A to B, and rounding off a route by paying for parking, drivers in the UK can expect to see improvements to practical usage and integration of technology in their daily lives.
- There will be more competition in the market and app choice for motorists
The opening of the market to competition outside of the confines of the traditional single-supplier model will begin to gather momentum, and this will mean a wider choice of preferred apps for motorists. In 2022, Open Market pilots in Manchester City Council and Oxfordshire County Council, using the DfT-funded National Parking Platform, showed that it is possible to have multiple providers competing at the same location, bringing more choice and reliability to consumers and councils alike. And now, new entrants that provide services outside of the parking ecosystem will come into play.
With motorists free to use their app of choice this will reduce costs to the motorist and increase digitisation. Evidence from Bournemouth, Christchurch and Poole Council (BCP), who made the move to multiple cashless parking providers in 2021, shows that digital penetration grew by more than 250% over 2 years with the introduction of multiple phone parking providers so app parking now accounts for more than 55% of all parking transactions. This is a trend that I expect to see grow, as more authorities adopt the Open Market construct.
- 3G sunsetting will increase reliance on app-based transport services
The unprecedented growth of 5G, outpacing 3G and 4G uptake, represents the quickest generational rollout for the mobile industry. As 5G is setting new standards of hyperfast connectivity and its star is rising, 3G is fading into obsolescence, which will cause trickle-down effects that mark significant changes in the way we park.
Network providers will be retiring band services, and as this happens hardware will be affected. In parking, chip and pin services for payment reliant on 3G modem hardware will stop working. 3G sunsetting presents challenges for physical payment methods, and potentially costly upgrades to machines to stay connected. Many people are still unaware of these changes, as 79% of people have no idea that the 3G network is being phased out, according to a 2020 survey.
App-based solutions will remain unaffected by network alterations, as these services rely on device connectivity to mobile networks across 4G, 5G, or IVR for those paying via phone call. Apps circumvent these challenges and I predict they will be more attractive to Councils and operators in 2023.
- Digitalisation positively impacting transport strategy for Councils and operators
The main dimension of the impact of digitalisation is around the end-user experience, but the advent of technological solutions also provides useful back-end data. For Councils and operators, with increased digitalisation comes more data points and information about vehicle types, emissions, and dwell times. Armed with this information authorities can use this data to make informed decisions around environmental policies and wider parking controls to make our cities more liveable and more manageable.
Trends in the transport industry are part of a moving picture, and how much is changed in this space is dependent on investment and strategy. Forward-thinking Councils and operators have already seen the benefits of harnessing technology advancements, as well as data-driven insights from Mobility-as-a-Service providers.
Progression of a data strategy is planned for the Government, as over 90% of senior civil servants will be upskilled on digital and data essentials, with learning embedded into performance and development standards, as part of the ‘Transforming for a digital future‘ policy. In 2023, on a local level, I hope to see continued progression of digitalisation ambitions, which will have noticeable and important impacts on the ground level, for the drivers who can take advantage of new transport developments.
- There will be a shift from manual to automatic services in transport
Over the past 12 months, we’ve seen some great examples of automatic solutions for transport in the UK, with automatic number plate recognition technology playing a part in optimising parking payments. As adoption continues, more drivers will be able to benefit from touch-free solutions.
When travelling into a town or city centre, it’s often the process that motorists would locate a space, and pay for parking via an app. Should the motorist need more time, they can potentially top up their parking session via extending on the app. Collaboration between parking providers and operators means that camera technology can completely automate the process and charges are calculated separate to manual management.
Automatic payment facilitates touch-free entry and exit to parking facilities, and solutions are being trialled in the UK currently. The parking transaction starts and ends completely autonomously, bypassing pay machines. In 2023 we will see an expansion of these high-quality technology solutions for drivers, allowing for new and exciting levels of convenience for urban travellers.
Looking at the horizon
In 2023 I believe we’ll see great strides made toward Mobility-as-a-Service models for motorists, with digital channels enabling better flow in transport. There will be more elements of disposability when moving from A to B, and transport service providers will look at becoming holistic one-stop shops. The popularity of the likes of Uber and Lime attests to the fact that mindsets are already shifting towards service-based transport.
Within the microcosm of parking, providers are linking up mobility services for motorists using apps, and there will be scope to manage a journey in its entirety from one point of contact; mapping, location, payment, and charging services can be housed in one space. We’re also seeing app-based services create actionable data streams for Councils and operators to improve transport management in local areas. These benefits are ticks in the pro column for choosing apps, as they herald an age for more liveable towns and cities.
Electric buses are the World Cup winners? Investment in greener transport could be positive legacy of Qatar 2022
Notwithstanding the controversy surrounding the FIFA World Cup in Qatar, there are many things that make this event unique and unprecedented. One less remarked upon aspect of the tournament is the role of electric buses in getting fans to and from stadiums. Here, Roger Brereton, Head of Sales at bus steering parts manufacturer Pailton Engineering, argues that investment in greener buses could be a positive legacy of the tournament.
The 2022 FIFA World Cup will be a tournament of firsts. The first World Cup to be hosted by an Arab nation and the first World Cup to take place in the Middle East. The first World Cup to be held during the winter months. It is also the first World Cup claiming to be carbon neutral.
That claim, made by the tournament’s organisers, is certainly open to question. Some have questioned the sustainability credentials of the event and others have accused Doha of greenwashing. Regardless of where one stands on this controversial debate, there is no doubt that delivering this major sporting spectacle in a more sustainable way has been a key part of the agenda. There are surely lessons we can all learn from this experience.
A boost for buses
One area worth considering is the investment in public transport and electric buses specifically. An estimated 1.2 million football fans will descend on the small island state to witness the World Cup and they will be escorted to the eight stadiums via a fleet of buses that are integrated with the country’s metro system.
In preparation for this event, Qatar has extended its existing fleet of 1,000 buses to approximately 4,000 in total. As part of this investment, Chinese bus manufacturer Yutong has delivered 741 battery powered electric buses, giving Qatar one of the largest electric bus fleets in the world. Although electric buses were used during the 2008 Beijing Olympics, this will be the first time electric buses have been used to support public transport during a major global event on this scale.
In addition to the buses themselves, there has been a corresponding investment in infrastructure. The new bus depot in Lusail, which has capacity for 478 buses, entered the Guiness World Records as the world’s largest electric bus depot. It is the first of its kind in the region to rely on solar energy and includes 11,000 PV solar panels to generate 4MW of power every day.
This investment is not seen as a temporary indulgence but has been planned as part of a long-term agenda. The buses and the new infrastructure have been designed to be carefully integrated with the country’s metro system, home to one of the world’s fastest driverless trains which became operational in 2019. Yutong will also be investing further in Qatar by building a factory for manufacturing.
There is widespread agreement around the world about the need for greater investment in public transport and electric buses in particular. One of the potential barriers to electrification of bus fleets has always been the high start-up costs and the need for significant infrastructural changes. Major sporting events like the World Cup can potentially provide the impetus for a much needed shift toward greater investment in public transport.
While the World Cup itself may be short lived, it can be hoped that the legacy is more sustainable transport. Those of us interested in buses in other parts of the world will watch the football no doubt, but we will also be watching for what we might learn from this extra investment in e-mobility.
Pailton Engineering designs and manufacturers custom steering parts for heavy vehicles, included the bus and coach sector. Discover more at pailton.com