Global production shortfall of nearly 10 million vehicles in 2021 highlights urgent need for EU Chips Act
- Speed is of essence for an EU comprehensive semiconductor investment plan, as other regions move ahead.
- CLEPA publishes a policy guide with concrete actions to ensure the success of the upcoming EU Chips Act.
The chips shortage continues to pressure industry and presents a significant to existential challenge for automotive suppliers, highlighting the need for a dedicated semiconductor strategy and tangible action from policymakers. European automotive suppliers welcome the European Commission’s initiative for an EU Chips Act, due to be published 8 February , and present four concrete actions to make the EU’s semiconductor strategy a success.
During 2021, the global production of 9.5 million vehicles was delayed due to a shortage of semiconductor chips. Although this year could show a modest recovery of global light vehicle production, supplier and market estimates still forecast, on average, production losses of 4 to 6 million vehicles.
The EU’s automotive industry is disproportionately affected by the current semiconductor shortage. One out of every four cars that wasn’t able to be produced last year due to the shortage, would have been produced in the EU. As a result, the EU’s share in global light vehicle production dropped from 18.6% in 2019 to 15.8% in 2021. Further to light vehicle production, disruptions in the production of trucks threatens essential areas of EU supply chains. Automotive is responsible for 37% of the demand for semiconductors in Europe , compared to 10% globally , highlighting that a successful strategy to foster a strong European industry for microelectronics should build on a central role for automotive suppliers.
The ongoing shortage highlights the need for a coordinated industrial and innovation EU policy that allocates substantial public investment and creates the right conditions for private investments to strenghten the semiconductor ecosystem and increase production capacity. CLEPA, the European Association of Automotive Suppliers, supports the EU’s commitment to adopt an EU Chips Act, but stresses the need for substantial investment beyond the commitment made so far. Where other regions have pushed ahead with comprehensive semiconductor investment plans, policy initiatives and investment commitments by EU governments are significantly smaller and lack in coordination and focus. If the EU takes too long to provide clarity on the investment framework, companies interested to invest in the EU, may instead look elsewhere, and there are signs that this is already happening.
Raising the perspective of the supply industry and contributing to this milestone for a successful chips strategy, CLEPA has published a policy guide for an ecosystem approach that invests in R&D and manufacturing capabilities, but also leverages the advantages of the automotive sector and facilitates developments in semiconductor application technologies, such as connected and autonomous mobility. The EU Chips Act should combine substantial public investment and improvement of investment conditions within the single market with a commitment to facilitate global trade and private investment.
“The EU Chips Act provides an opportunity to strengthen the resilience of supply chains and further cement the European automotive sector’s global leadership position on innovation. The EU’s strategy should build on strengths in chip design and automotive, while increasing manufacturing capabilities according to industry needs. The semiconductor and automotive industries are delivering high value solutions for consumers and businesses thanks to globally integrated supply chains. Policymakers should therefore maintain their commitment to an open market and help to diversify supply chains in cooperation with global partners where possible,” says Sigrid de Vries, CLEPA Secretary General.
 LMC Automotive, 23 December 2021, data refined by assessments CLEPA Semiconductor Expert Group
 Oxford Economics data on production of light vehicles
 ESIA assessment of 2019 European semiconductor sales
 McKinsey, May 2021, data refined by assessments by CLEPA Semiconductor Expert Group
In: CLEPA News, Growth & Competitiveness