SEMICONDUCTOR CHIPS IN CARS: WHAT THEY DO AND WILL THE SHORTAGE CONTINUE?

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January 26, 2023
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Semiconductor Chips in Cars: What They Do and Will the Shortage Continue?

 

Are supply chain issues putting your plans to buy a new vehicle on hold? Milex Complete Auto Care can keep your existing ride in prime condition and save you from sticker shock at the dealer.

 

What is a Semiconductor Chip?

Semiconductor chips power our world. Smartphones, laptops, televisions, and even kitchen appliances, all rely on semiconductor chips to function. A semiconductor chip, often referred to as an integrated circuit, conducts electricity and is made from silicon or germanium. Experts estimate there are more than 100 billion integrated circuits used on a daily basis across the globe. Global semiconductor industry sales hit $45.5 billion during the month of November 2022 alone, according to the Semiconductor Industry Association.

 

The average automobile contains approximately 3,000 semiconductor chips. Hybrid and electric vehicles require more chips than traditional cars. Many of the high-tech, updated features in new cars require semiconductor chips. The chips are used for infotainment systems, safety features, and cruise control. They can improve fuel efficiency, lower emissions, and control the battery.

 

Pandemic Fuels Supply Shortages

The pandemic outbreak created headaches for the automotive industry, one of the largest manufacturers in the country. Factory and dealership closures to comply with government safety guidelines disrupted business. Approximately 90% of vehicle production factories were temporarily closed in 2020, resulting in an automobile shortage when dealerships reopened. Lack of supply meant customers had to cope with high price tags and long wait times for new vehicles.

 

Domestic vehicle assembly lines were not the only hurdle facing the automotive industry. A shortage of semiconductor chips hampered the industry’s long-term recovery. Vehicle sales in 2021 were still down 12% from pre-pandemic results in 2019, according to the U.S. International Trade Commission.

 

When car manufacturers canceled chip orders during closures, the semiconductor industry set its sights on other markets, such as telecommunications and consumer electronics. The shift caused a backlog when the automobile industry was ready to ramp up production. To cope with chip shortages, vehicle manufacturers were forced to slow production or limit the number of chips a vehicle required.

 

The chip shortage prompted many vehicle manufacturers to make contingency plans for future disruptions. Manufacturers, like Ford, are exploring making chips in-house to mitigate future shortages. As the number of electric vehicles increases, demand for chips will continue. Global electric vehicle sales doubled in 2021 and were set to reach an all-time high in 2022, according to the International Energy Agency.

 

Milex Cares
Milex understands the challenges facing American drivers. The shortfall in supply and high prices are forcing people to abandon plans to upgrade to a new model. Our service technicians can help ensure your current ride remains in good condition for the long haul. We offer affordable, comprehensive auto repair and preventative maintenance services designed to keep your vehicle in tip-top shape and ready to weather your next road trip.

 

Quality service is one of the hallmarks of Milex. We stand behind our work by offering a variety of nationwide warranties to give customers peace of mind. Many of our locations offer free diagnostic checks and brake inspections. All our Milex shops are locally owned and operated, and we strive to form long-term relationships with our customers.

 

We’re part of the Moran Family of Brands umbrella of brands. Moran franchises six automotive and window tinting brands, including Milex, Mr. Transmission, and Turbo Tint. Many of our Milex locations are co-branded with Mr. Transmission, enabling you to access a one-stop shop for all of your car maintenance and repair needs.

Our skilled mechanics are ready to help keep your car in prime condition. To find a local Milex in your area, visit our website and schedule an appointment today.

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