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Semiconductor supply for automakers could run low, as the materials needed to produce them are held up by the Iran war.
Analysts have warned that a repeat of COVID-era semiconductor shortages could occur, as the materials vital to electronics production are held up in the Straight of Hormuz.
A report by Automotive News Europe indicates that semiconductors and EV batteries could reach critical supply shortages if the current Iran conflict extends beyond two months.
Based on data compiled by the Supply Chain Intelligence Institute Austria, the impact of military action in the Middle East could not only affect the supply of oil and natural gas, but also noble gases used in electronics production.
The author of the study, Peter Klimek, told ANE, “Around one-third of the helium needed for chip production comes from Qatar. It will depend on how quickly chipmakers can secure alternative sources.”
The USA is currently the world’s largest helium producer, but taking Qatar’s output out of the global supply chain could lead to massive shortages.
As demand for memory chips rises, driven by the surging demand for high-powered, AI-capable computing, automakers enter a competitive market for components.
For countries like Qatar and Kuwait, the Straight is the only maritime passage available.
Klimek warns that the automotive sector could be hardest hit if semiconductor shortages occur.
“In the event of a chip shortage, the auto industry would likely be hit harder, as priority would be given to sectors such as medical applications,” he explained.
The world’s semiconductor production is largely centred in Taiwan, producing around 60 per cent of the world’s supply of computer chips.
Automakers are, at present, monitoring the situation but have not publicly revealed any processes or contingencies they may have to counter the issue.
The last major semiconductor shortage, sparked by supply chain interruptions resulting from the COVID-19 pandemic, saw automakers forced to reduce production capacity from 2020 to 2022.
The resulting shortage forced production slowdowns and resulted in delays and waiting lists for popular models.
A timely resolution to the Iran conflict could see shipping resume without a major impact to electronics production, but as more and more industries feel the pressure of rising fuel costs and restricted global shipping, the crucial semiconductor industry could be next.
Kez Casey migrated from behind spare parts counters to writing about cars over ten years ago. Raised by a family of automotive workers, Kez grew up in workshops and panel shops before making the switch to reviews and road tests for The Motor Report, Drive and CarAdvice.
