Retronix Blog

Jan 21, 2021

Chip-shortage crisis – demand is high, supply is tight.

The world’s largest carmakers are facing a critical shortage of semiconductors that threatens to hamstring production just as the industry tries to stage a comeback from a sales slump caused by the pandemic.

CNN Business (London)

Major automakers are suffering from a global shortage of chips as demand is high, and supply is tight. This is a fallout from the Coronavirus pandemic, forcing carmakers to halt or slow down their production.

Audi, for example, is slowing their production by aiming to make 10,000 fewer cars in the first quarter of 2021 and putting more than 10,000 workers on furlough.

Their parent company, Volkswagen, also announced their slow down due the lack of chips on the market, as have other global carmakers such as Honda. Others have made statements about their adaptions in production.

“We are doing everything in our power to minimize lost production and to ensure that normal deliveries to customers can be resumed as rapidly as possible,”

Volkswagen Group purchasing manager Murat Aksel said in a statement on December 18.

This bottleneck in the supply chain could hurt the automotive industry further as carmakers risk missing out on the demand uplift due to their assembly lines slowing.

Part of this is a result of the industry being forced to close their factories in 2020 due to the pandemic, resulting in leading semiconductor manufacturers reassigning their production capacity to companies making smartphone, laptops and gaming devices. This means they are now competing for the manufacturing capacity.

German car-parts company Continental described “largescale supply shortages”, with lead times of six to nine months, adding bottlenecks were expected to continue “well into 2021, causing major disruptions”.

CCS Insight analyst Geoff Blaber said: “Semiconductors have a broad range of applications but a very limited pool of companies capable of manufacturing the silicon.

“Demand is high, and supply is tight” and any sudden needs “can prove very difficult to accommodate”.

As this period of history is unprecedented it is impossible for analysts to make predictions using historical data as to the long-term impact and the length of time this allocation period will last.  But with all the other challenges being thrown at us all over the course of this year, we hope that the industry will overcome this without too much long-term damage to the industry.

From Retronix perspective, we have seen customers reporting that they are having to step outside of the approved suppliers to source the components they require, and this has seen an upturn in our testing services as we act as a third-party test house to help our customers verify their new suppliers.  Our testing services alongside services such as – component reclaim, retinning and alloy conversion are tools that we can offer the industry to assist our customers and support them through the tough times of allocation. Reclaim memory devices & high value IC’s from obsolete, damaged or old revision PCB’s.

Retronix can help with this. You can find out more about our component recovery here or get in touch with us and find out how we can assist you. We also carry out free of charge samples to help you prove our process and the benefits to your company.

If you have a requirement that you would like to discuss with us, please make contact via email: or use our Website Contact Us page.