Roland Berger's latest study titled "Semiconductor shortage: A different kind of trouble ahead" has concluded that the ongoing semiconductor shortage shows no signs of stopping, especially for automotive and industrial manufacturers dependent on 'legacy' semiconductor technologies and nodes. Despite an easing of shortages on the consumer side, the chip imbalances are expected to affect these industries for several years to come.
The report has noted that the consumer demand for electronics has softened by 30 percent in the second-half of this year, resulting in revenue decline for semiconductor manufacturers in 2022 and 2023. This is leading to a drop in sales for some semiconductor manufacturers and an oversupply of the newer, high-performance chips.
Older-generation semiconductors, on the other hand – those that are often still used in automotive and industrial electronics – are set to remain in short supply for the foreseeable future. The supply bottleneck for analog chips and microcontrollers is expected to last several years, while advanced-node chips are subject to overcapacity and oversupply.
"We are still seeing a structural shortage of analog semiconductors and microcontrollers that will last several years. Lower demand for computers and consumer electronics does provide some relief for the semiconductor industry. But it will make capacity and inventory planning even more difficult for both, the manufacturers of microchips and the companies that use them," says Falk Meissner, Partner at Roland Berger.
"We have the unusual situation of seeing shortages, overcapacities and oversupply of semiconductors all at the same time", he added.
It is reported that over 62 percent of the automotive market and 57 percent of the industrial market relies on analog or mixed signal chips, microcontroller units, or specialty components such as MEMS. As chip manufacturers increasingly look to future proof their businesses in more advanced chips, the older and more specialized chips will increasingly be in short supply, according to the researchers.
Although overcoming the chip shortage has been a big issue over the last two years since the pandemic, very little attention, resources, and public discussion has centered on the 'legacy node' chips that automotive and industrial companies rely upon.
"Automotive and industrial companies need to adapt to the market practices of the electronics and semiconductor industry in order to secure their chip supply. That will include always using the latest generation of chips and having a risk-adjusted procurement policy. Companies cannot just wait for the chip shortage to pass – they will need to be very proactive themselves," Meissner sums up.
The chips and semiconductor shortages have put brakes on the brisky growth of global EV industry in recent times. Electric vehicles use advanced processing systems for battery management and functioning of other electronics in the vehicle, which makes semiconductor chips critical for their manufacturing and cost considerations.
Advanced semiconductor chips made of gallium nitride and silicon carbide have helped reduce EV costs. These chips are used in BMS systems developed for battery energy storage systems (BESS) that are gaining market momentum – both at grid-scale and domestic applications – in recent times.