Chips Shortage Is A Greater Concern Than Covid-19 For Daimler Truck CEO

The global semiconductor shortage is a cause of greater worry compared to the economic impact of the Covid-19 pandemic for Daimler Truck CEO Martin Daum.

“I’m more concerned about semiconductors than Covid at the moment,” Daum said in a television interview on Friday.  “Trucks are necessary to keep our system alive, even in the depth of the crisis.”

At its current position the pandemic is not viewed as a major risk for the company, Daum said.

“The risks are the supply situation, especially on the semiconductor side,” he said.

The process of setting a target for market share by truck manufacturing companies usually follows an “estimate of the market”, the executive said.

“Then you have a feeling for what your production quota is,” Daum said.

“These days, you call your semiconductor suppliers, ask how many you can get and that’s basically your production program because you know every single truck you build will sell.”

According to Reinhard Ploss, the CEO of the automotive chipmaker Infineon, the company is currently finding it difficult to cater to the current demand for its semiconductors from auto companies.

“The automotive, but also other verticals, are very tight currently on supply,” Ploss said in a television interview.

“We are far away from matching the demand,” he said, adding that demand is constantly increasing because there’s a backlog building up. “The problems are rising and piling up over time.”

In September, a new 1.6 billion euro ($1.8 billion) semiconductor facility in Villach, Austria, was launched by Infineon to be able to cater to the increasing demand for its chips, The plant’s chips will mostly be utilized to address demand from the automotive industry, data centers, and solar and wind energy generating, according to the company.

The global semiconductor shortage is being exasperated by the move by auto makers to make more electric vehicle models as these green vehicles potentially require up to ten times as many chips as conventional fossil fuel powered vehicles, say analysts.

But “significantly higher” numbers of semiconductors is not needed for the electric vehicles that are being made by Daimler Truck when compared to the trucks that have the internal combustion engines, Daum said.

“I would say it’s less than 10% so that’s not the decisive point,” he said.

(Adapted from CNBC.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability

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