23 June 2022 - 17:05When listening to our clients spread across the world in the automotive ecosystem — the original equipment manufacturers , leading suppliers, retailers and technology providers — we have identified a number of key trends that are affecting and shaping the industry.
Automakers still rely largely on just-in-time sourcing strategies using short-term forecasts, which offer little to no buffer — despite 26-week lead times for semiconductors. Many components are also sourced from a single producer and subject to strict quality requirements. All these factors have limited the flexibility of the supply chain during the recent shortages.
Semiconductors have become an integral part of the supply chain for many industries. Chips power everything from cars and smartphones to industrial equipment, and are also a key enabler for widespread adoption of emerging technologies such as AI, quantum computing and advanced wireless networks such as 5G.
To diversify and address shortages, chip manufacturers recently announced new investments that include:Intel dedicated a portion of the production at one of its largest non-US foundries for the automotive sector;Samsung is planning a $116bn investment over the next decade. The fact that leading OEMs use their key market regions as a differentiator is an additional factor. European OEMs tend to focus on Europe and China, while Japanese OEMs tend to prioritise the North American and Japanese markets. North American OEMs primarily target their own home market, often with one additional region in the mix. Suppliers are thus facing different challenges depending on the region they are active in and the OEMs they supply.
The regulatory environment in Africa is lax in comparison, with low to zero control of carbon and sustainability targets.
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