Chip crunch forces Stellantis production halt

STELLANTIS is the latest automobile manufacturer to feel the effects of the global microprocessor shortage, with a supply deficit this week forcing the manufacturer to suspend production at its Sochaux car plant in France “until at least Saturday”, a union official said.

It is the second time that chip shortages have impacted production at the historic Peugeot facility in eastern France, where Stellantis now builds the Peugeot 3008 and 5008.

Impacts of the microprocessor shortage have plagued the automotive industry since the early days of the COVID-19 pandemic and show few signs of abating, despite the best efforts of microchip producers across the globe to ramp-up supply.

Earlier this year, German automotive giant Bosch said it expects the semiconductor shortage and rising raw materials costs to have a marked influence on vehicle production throughout the 2022 calendar year, a prediction that has so far proved unnervingly accurate.

Speaking to Bloomberg reporters in February, Bosch said it expects overall output to be down eight per cent on pre-pandemic levels for 2022, and that it is investing approximately €400 million ($A572.6) at its facilities in Germany and Malaysia to bolster microprocessor supply.

The shortage of microprocessors has forced production delays across numerous automotive manufacturers over the past three years, with Stellantis, Toyota, Volkswagen Group and others reporting output interruptions as a result.

Toyota supplier Denso reported in June that it was considering starting a subsidiary company to help address the issue, one it says shows no sign of slowing down due to the increased demand for microprocessors required by electric vehicles and those with greater self-driving capabilities.

According to a Bloomberg report published in June, Denso chief technology officer Yoshifumi Kato said the company was examining a business case for the separation of its microprocessor production division to see if it would be “better positioned outside of the company”.

“We need to think about whether the time will come when we sell semiconductors, alone, externally,” Kato-san told Bloomberg.

“It’s worth looking into whether that kind of structure is possible.”

Denso is the world’s second-largest automotive parts manufacturer and ranks as the world’s fifth largest supplier of automotive semiconductors – the firm’s microprocessor division generates about ¥420b ($A4.4b) in sales, Bloomberg reports.

The chips Denso makes go into automotive parts it produces on behalf of car-makers and other suppliers.

Kato-san told the publication that Denso, which had invested ¥160b ($A1.7b) in its semiconductor business during the past three years, was not considering utilizing a potential spin-off of its chip business to raise fresh funds for other investments .

According to Kato-san, demand for automotive semiconductors will continue to escalate as the industry shifts to autonomous, electric, and internet-connected cars.

At a June briefing, the Aichi-based firm said it was targeting ¥500b ($A5.3b) in sales from its in-house power and analogue chip business – an increase of about ¥80b.