BMW sees wave of semiconductor investment easing supply crunch

BMW expects the global semiconductor shortage hampering auto production to be resolved as businesses and governments focus on the issue.

“There is an intense focus on the issue globally, so it is to be expected that supply and demand will be back in balance within two years at the latest,” said the CEO of BMW’s Oliver Zipse in an interview Thursday at the company’s driving academy near Munich.

A lack of chips used in everything from navigation systems to some mirrors has forced automakers to cut production as demand increases in major economies that ease restrictions in the event of a pandemic.

Ford Motor last month estimated that semiconductor scarcity would cut profits by $ 2.5 billion this year. BMW has so far reported only limited shutdowns at two European factories.

Shortages that arose after consumers procured electronic gadgets while confined to the home sparked widespread efforts to boost production.

The European Commission plans to double the block’s chip production to at least 20% of global supply by 2030, a move that would reduce its dependence on foreign companies for critical components.

US President Joe Biden has vowed to better secure the US supply chain by reviving domestic chip manufacturing. Taiwan Semiconductor Manufacturing will spend up to $ 28 billion on new factories and equipment this year.

While waiting for investment programs to ramp up, manufacturers have little choice but to idle their factories or take the unusual step of removing some high-tech features from some models.

Zipse said BMW has no plans to seek any new partnerships or joint ventures despite the current restrictions. “For critical components, we will stick to long-term supply contracts and a range of different partners,” he said.

This will include battery cells essential to accelerate the deployment of electric vehicles by BMW. “From our perspective, we’ve covered the necessary supplies with long-term contracts,” Zipse said.

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