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Microchip Shortages: Some Encouraging Signs

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Daniel Rufiange
Production of microchips is expected to rise 10 to 15 percent in 2022, according to analysts

Even as the economy began to revive after the first two years of the pandemic, a new, related monster reared its head: shortages of microchips and other vital components to carmaking. Supply-chain problems have had a major impact on automakers, who can't get access to all the parts they need to assemble the number of vehicles they hope to produce on time. Delays for buyers waiting for their new vehicle have reached epic proportions in many cases.

The first half of 2022 has not shown much improvement over the period preceding it. Some experts have predicted a return to normal in 2023, at best.

We'll take good news when it comes, however, and Automotive News provides some today with a report that confirms microchip delivery times (or lead times) fell during the month of June.

In itself the change is minuscule – lead times (LTs) went from 27 weeks and 1 day in May to 27 weeks in June. We're talking here about the time between when an order is placed by a manufacturer and when the order is delivered. The date now shows that chip production has increased and that they are starting to increase the delivery rate.

“There are some signs of supply chain inflation easing and price increases slowing, but other pockets remain. Among key companies we track, NONE posted record-high LTs, perhaps another sign of ‘peak cycle.”

- Chris Rolland, analyst at Susquehanna Financial Group

It should be noted that that 27 weeks refers to an average; some parts are thus being delivered faster. In some cases, lead times have been reduced by 45 percent. However, for some components, the delay is 52 weeks.

Analysts (and, we’re sure, automakers themselves) continue to monitor the situation closely, but this first encouraging sign does at least hint at a possible turning point towards an end to the shortages, if not in the short term then perhaps in the medium term (12 to 18 months). 

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Daniel Rufiange
Daniel Rufiange
Automotive expert
  • Over 17 years' experience as an automotive journalist
  • More than 75 test drives in the past year
  • Participation in over 250 new vehicle launches in the presence of the brand's technical specialists