The international semiconductor shortage continues to hamper Class 8 truck manufacturers, and new commercial motor vehicles orders could see further backlogs through 2022.
“Across multiple end markets, the absence of a single critical chip, often costing less than a dollar, can prevent the sale of a device worth tens of thousands of dollars,” according to Deloitte’s semiconductor industry outlook report for 2022.
News of the semiconductor shortage in 2021 was largely attributed to Covid-related plant closures and a disjointed supply chain. The chip shortage was expected to wane with a reported less-lethal Omicron strain circulating and global vaccine availability in place. It appears improving these conditions is not the elixir truck manufacturers require.
Deloitte, the largest professional services network in the world by revenue and workforce, indicated the semiconductor shortage resulted in losses exceeding $500 billion last year. In Washington, D.C., agency leaders are thinking long-term with few options on the table in the coming months.
“The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible,” Commerce Secretary Gina Raimondo reportedly stated. “With skyrocketing demand and full utilization of existing manufacturing facilities, it’s clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities.”
Congress reportedly has not made headway in passing a $52 billion spending package to improve American-based chip manufacturing. Some reports indicate U.S. plants possessed as few as a five-day allotment to keep production moving. These and other conditions prompted Deloitte to make the following 2022 predictions.
- We expect the global industry to grow 10 percent in 2022 to over US $600 billion for the first time ever. Chips will be even more important across all industries, driven by increasing semiconductor content in everything from cars to appliances to factories, in addition to the usual suspects—computers, data centers, and phones.
- We expect shortages and supply chain issues to remain front and center for the first half of the year, hopefully easing by the back half, but with longer lead times for some components stretching into 2023, possibly well into 2023.
- The ongoing talent shortage will be made even more severe by the addition of increased semiconductor manufacturing facilities outside Taiwan, China, and South Korea. The higher demand for software skills required to program and integrate chips into fast-growing markets will further exacerbate the shortage. Although Class 8 truck orders appeared to be experiencing something of a rebalancing in December, the number of orders fell far below those in 2020.
“While improved, December’s orders were the second weakest of the year, reflecting ongoing supply-side shortages that continue to constrain production,” ACT Research analyst Kenny Vieth reportedly said. “Importantly, we reiterate, with critical economic and industry demand drivers at, or near, record levels, industry strength is exhibited in long backlog lead-times, rather than in seasonally weak orders.”
North American Class 8 truck production remains overly reliant on semiconductors made halfway around the world, and competition for a limited supply remains fierce. If there’s any silver lining, it’s that the country may not have enough truckers to get behind every wheel anyway.
Sources: marketwatch.com, supplychainquarterly.com, wsj.com
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