Audi delays production as it battles global semiconductor shortfall

Dearth of automotive chips has been ascribed to a sharp rise in demand for consumer electronics during pandemic

Workers wearing protective face masks secure rear window frame fittings to an Audi e-Tron electric automobile on the assembly line at the Audi AG factory, operated by Volkswagen AG, in Brussels, Belgium, on Thursday, June 4, 2020. By taking on an additional $72 billion in new debt to get through the coronavirus pandemic, automakers and their suppliers have entered a profit desert where returns will be decimated by slumping sales and costly investments. Photographer: Olivier Matthys/Bloomberg via Getty Images
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A global semiconductor shortage is forcing Audi to delay the production of high-end cars and to furlough workers.

The Volkswagen AG brand has put more than 10,000 workers on furlough owing to reduced production but overall output for 2021 should not be affected because the company expects to make up for lost time in the second half, VW chief executive Markus Duesmann told the Financial Times.

The world’s biggest carmaker last month issued a warning about major production disruption in first-quarter manufacturing around the globe because of the bottleneck.

Daimler, Nissan, Honda, Ford and FCA have also said they are being affected by the chip shortage.

Honda has even been forced to shut its Swindon factory in England for four days this week.

"The situation is currently being monitored with a view to restart production on Friday, January 22," it told workers last Wednesday.

Meanwhile, a lobbying organisation for General Motors, Ford and the US operations of FCA has been petitioning American authorities to pressure Asian semiconductor makers into reallocating output from consumer electronics to essential chips for cars instead.

The American Automotive Policy Council is in talks with both the current US Commerce Department and the incoming administration of president-elect Joe Biden, according to Bloomberg.

The semiconductor shortage is a manifestation of changing consumer behaviour brought about by the Covid-19 pandemic.

With more and more people working, playing and staying at home, demand for consumer electronics has boomed. At the same time, the demand for cars plummeted worldwide in 2020.

This has meant chip manufacturers have pivoted production to focus on the consumer side but an unexpected rise in demand for cars, fuelled by a rebound from China, has caught them cold, Mr Duesmann told the Financial Times.

Bosch and Continental, parts suppliers to the likes of Audi and other leading carmakers, also spoke of difficulties in sourcing enough chips earlier this month.

Despite the challenges, Mr Duesmann said that Audi is doing all it can to limit production shortfalls to fewer than 10,000 models for the first quarter.