Why do cars need chips and what do they do?

Car production suffered in 2021. In the same way that gaming consoles, computer parts, fridges, TVs and even dishwashers were hard to buy, orders for many new cars have been hard to fulfil and dealerships across the country have been forced to disappoint customers and serve them with delays of weeks and, in many cases, months.

Why Does The Chip Shortage Impact Car Production

For instance, the hotly anticipated all-new 2021 Hyundai i20 N, said to be a hot hatch that is as performant and fine-tuned as the renowned Toyota GR Yaris, has inadvertently become a 2022 car. Orders opened up in September 2021 but most customers that ordered then still haven’t got their new cars today, with waiting times now sitting at around six months.

Why Does The Chip Shortage Impact Car Production

And Hyundai isn’t the only manufacturer suffering from the chip shortage. Opel is planning to temporarily shut one of their plants in Germany due to the impact of the chip shortage, with around 1,300 employees due to lose income. The CEOs of Volkswagen, Daimler and Ford Europe have all spoken out about the issue too and discussed the uncertainty of when it will end.

Why Does The Chip Shortage Impact Car Production

Some may be wondering how chips, semiconductors and silicon hold back car production. It’s simple really. Like many things in life nowadays, cars are absolutely riddled with computer chips. Sensors, switches, screens, dials, mechanisms all have computer chips attached to them so whether you want to wind your window down or use the brake pedal, most actions you do whilst driving can be traced back to a computer chip controlling or monitoring that action.

It’s hard to say how many chips the average car uses, with some sources saying there are thousands of computer chips in each car and others saying there are a few hundred, but the fact of the matter is that modern cars use a lot of computer technology. We would assume the more complicated the car, the more chips it will require so luxury cars with a wide range of advanced features will likely have more than a more stripped-back supermini.

Why Does The Chip Shortage Impact Car Production

There are several theories as to why and how we ended up with such a great shortage of what is one of the most important materials in today’s technological age, one of the main ones being that the pandemic caused a sudden drop in demand, which then all too quickly rebounded. As car manufacturers and many other manufacturers of goods that use computer chips either slowed their production during the pandemic or shut down completely, orders for chips decreased.

Why Does The Chip Shortage Impact Car Production

But suddenly, car manufacturers, as well as many other manufacturers in other industries that rely on computer chips, opened up shop again as demand suddenly rebounded and they all put in their orders for the microprocessors, SoCs and memory chips that are needed to produce their goods. Production of chips was unable to keep up with the sudden rebound in demand and still to this day, the supply chain of the chips industry hasn’t been able to find its footing again. With the pandemic limiting the chip suppliers ability to produce as much as they would normally, combined with buyers all suddenly demanding chips again, the world finds itself short on one of the most fundamental parts for most modern technologies, including cars.

So, if you’re thinking of buying a new car soon, expect to be met with an extended wait time, especially if that car is in particularly high demand.

Let us know if the chip shortage has impacted you or anyone you know, in the comments.

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