The automotive industry has been especially hard-hit by the ongoing global car chip shortage, but partnering with a trusted independent distributor can offer options in a tight market.
Shortages have dominated the news of the last three years, and the semiconductor shortage remains one of the most severe and far-reaching. The automotive industry, especially, has taken a blow from the ongoing chip shortage, with 4.4 million fewer cars produced in 2022. Automobiles’ increasingly sophisticated capabilities and connectivity have meant improved experiences for drivers and passengers alike, but they also mean that automakers are dependent on semiconductors and other electronic components that are in direly short supply.
The resulting automotive chip shortage has had a huge impact and will continue, with many industry experts forecasting that we won’t see relief until at least the end of 2023. The last two years have brought setbacks like vehicle production shutdowns at major automotive plants, however, some analysts are optimistic that the chip shortage will ease off this year based on increased production numbers. In the United States, the government is working to expand semiconductor manufacturing, passing the CHIPS and Science Act of 2022 in August that will encourage new chip manufacturing to in the US. However, this is a fix for the long term – not the present moment, in which automobile prices are high and many automakers are paring down nonessential features like screens, wireless charging features, and even navigation systems from their builds.
The dilemma automakers – and manufacturers across a broad swath of other industries – are facing highlights key vulnerabilities in the semiconductor and electronic-component supply chains. While traditional sourcing methods can serve in placid times, partnering with a trusted open-market distributor is a safety net that will provide vital adaptability in uncertain times and more flexible, beneficial options in calm ones.
Incisive market intelligence and targeted data collection and analysis are at the heart of effective independent distribution. The entire open-market business model relies on knowing and tracking who across the global marketplace has what product – or needs it. Making a place in your supplier base for a trusted, third-party-certified independent distributor means that you will be working with a partner whose business is solving global manufacturers’ unique challenges.
Within the auto sphere, this support manifests most keenly as dynamic shortage-sourcing support that can anticipate and help you navigate any disruption situation to remain agile no matter what the market brings. While Smith has been an expert at aiding our partners during shortages since our 1984 founding, our offerings extend beyond this to offer options for multifaceted procurement support like product lifecycle management and cost savings. We can also aid our global partners in getting ahead of disruptions by working closely with them to develop proactive inventory-management models tailored to their needs that can safeguard against future market shifts and upheavals.
Through all of this, quality remains essential – especially with the increased counterfeiting risk shortages bring. Modern vehicles are fine-tuned systems engineered to function precisely and protect everyone on the road with ever-evolving capabilities and features. Smith’s best-in-class, global quality laboratories verify the functionality and authenticity of the car chips and other components that enable these functions to the most rigorous standards.
“Automotive tech will continue growing smarter, more capable, and more connected – creating further demand for semiconductors and electronic components along the way,” said Cleat Kimbrough, Smith’s Vice President, EMEA. “Smith will be there for the auto industry as a comprehensive distribution partner to help them keep moving through any evolution or market situation.”
Editor’s Note: This post was originally published in October 2021 and has been revamped and updated for accuracy and comprehensiveness.
Keep an eye out here on our blog and our LinkedIn page for more industry news, analysis, and insights.
Last month, employees from Smith’s Shanghai office teamed up to plant trees at Changxing Island C...