What is ‘Chip Shortage’ & why is it delaying your car’s delivery by many months: Explained!

Car manufacturers around the world having been going through a tough phase due to pandemic and other problems. The sales have finally started picking up but, now manufacturers are unable to produce vehicle at the same rate as they used to do before. In India, things are no different. There is a reason why delivery of your brand new car that you booked is getting delayed. It is shortage of chips or semiconductors. Here we have a video that explains what is chip shortage and how is it affecting the delivery of your car.

The video has been shared by Interesting Engineering on their YouTube channel. The video talks about what is a chip and what is reason behind its shortage. Chip is actually is used is almost everything that we use on a daily basis. These are not just used in cars but, almost every electronic item that we are currently using.

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One of the main reason why there is a shortage in semiconductor chips is because of pandemic. Many manufacturers who use chips in their product had pulled out order as they thought the pandemic will decrease the demand for their product. In contrary to that, people started purchasing electronic items online and when the demand skyrocketed, there weren’t enough chips available for new orders.

Although, chips may look like a small piece of equipment, it takes almost two months to make one chip. One chips goes under several stages before it can be installed in a car or an electronic item. There are not many manufacturers who make semiconductor chips in the world. There are manufacturers like SMIC, TSMC and Samsung manufacture such chips.

TSMC and Samsung are already manufacturing chips to their maximum capacity. A car uses around 1,400 semiconductor chips which is a large amount. Natural disasters like the drought in Taiwan has also affected the production chips at TSMC as they use large amount of pure water to clean the factory and the silicon wafers. A fire also broke out in Renesas Electronics factory in Japan which mainly produces automotive mini-controllers. Although, the production has resumed at this factory, it has not reached it previous levels of production.

As mentioned above, it takes around 2 months to produce a semiconductor and due to these reasons, the time it now takes for a chip manufacturer to deliver chips to a car manufacturer has increased to almost 18 weeks. There are several car manufacturers in India who have already manufactured the vehicle but, are waiting for the semiconductor chips. Mahindra had delivered several Thar SUVs to dealership without installing touchscreen infotainment screen due to same reason.

Many manufacturers are planning to cut down production of cars at their plants as this is a crisis that will be there in the market for some time. This chip shortage is costing car manufacturers millions. Popular electric car manufacturer has actually come up with a solution and they have rewritten software in their own vehicle to support alternative chips. This way, Tesla has managed to survive the chip shortage and is continuing to maintain high levels of production even during this time.

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