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Researched by Industrial Info Resources (Sugar Land, Texas)--Among the many effects the COVID-19 pandemic has had on the world is supply-chain issues caused by numerous factors, including driver shortages, congested ports and full warehouses. Rolling blackouts, quarantining measures and lockdowns, especially in Asia, have exacerbated the situation. Among the two largest sectors affected by this issue are semiconductors and, connected with this, the automotive sector, which also is in the process of transitioning to new technologies. In a Thursday webinar, Industrial Info executives, including David Pickering, Industrial Info's vice president of research for Industrial Manufacturing, discussed these issues.
Automotive
The automotive sector is in a state of flux as automakers move into the electric vehicle (EV) market, which is bringing its own supply-chain issues. Feedstock materials for the lithium-ion batteries predominantly used in EVs is expected to increase by a factor of 15 to 20 times as automakers shift production to EVs, which are expected to represent about 70% of new vehicle production by 2030.
However, the shift to EVs is not without its challenges. Among the issues facing the increasing shift are that more charging stations are needed; charging technology needs to improve to make the process faster; and customer enthusiasm toward EVs needs to improve, especially in North America. Another issue facing this nascent sector is that different parts of the world use different types of EV chargers; there's no standard charging method.
According to Pickering, Industrial Info is tracking more than $90 billion in automotive project spending planned for this year, which is expected to grow as the year progresses. However, some of this planned activity will fall out--that is, be cancelled, placed on hold or shifted to a later date--and Pickering expects final spending for the year to come out to between $75 billion and $80 billion. Much of this spending has shifted from grassroot plants to in-plant spending, such as expansions, equipment additions and upgrades.
The average vehicle price is about 20% higher than it was in 2020. Projected final numbers for 2021 auto production are expected to be about 13 million units, down 3.5 million units from 2020. Much of this can be blamed on supply-chain issues, notably for semiconductors.
Semiconductors
Spending activity for semiconductor projects typically peaks every five to six years as new technologies are developed. However, the pandemic has changed this drastically, and spending in this sector is "through the roof," according to Pickering. At the onset of the pandemic, production and demand for vehicles declined, while demand increased for laptops, gaming and entertainment centers, and other electronic devices. As demand for vehicles has returned, semiconductors across the board often are unavailable when needed, and semiconductor manufacturers have broken the traditional five-to-six-year spending cycle to help meet this increased demand. The world's leading semiconductor manufacturers are definitely spending.
This sector is heavy in grassroot projects, but there also is a large number of in-plant expansions planned or underway.
In the U.S., Taiwan Semiconductor Manufacturing Company Limited (TSMC) (Hsin-chu, Taiwan), which has the majority of the world's market share and has plans to double production capacity over a three-year period, is developing a $12 billion plant in Arizona, and Intel Corporation (NASDAQ:INTC) (Santa Clara, California) is underway with a $20 billion plant expansion in the same state. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the detailed report on the TSMC project and here for the Intel project. Spending also is high in Texas, which is looking to become a hub for semiconductor manufacturing.
Pickering said, "The supply situation is improving slowly. By the middle of this year, it should have balanced itself out. We're not facing near the issues we were before, but capacity increases within the semiconductor industry have become the priority."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Automotive
The automotive sector is in a state of flux as automakers move into the electric vehicle (EV) market, which is bringing its own supply-chain issues. Feedstock materials for the lithium-ion batteries predominantly used in EVs is expected to increase by a factor of 15 to 20 times as automakers shift production to EVs, which are expected to represent about 70% of new vehicle production by 2030.
However, the shift to EVs is not without its challenges. Among the issues facing the increasing shift are that more charging stations are needed; charging technology needs to improve to make the process faster; and customer enthusiasm toward EVs needs to improve, especially in North America. Another issue facing this nascent sector is that different parts of the world use different types of EV chargers; there's no standard charging method.
According to Pickering, Industrial Info is tracking more than $90 billion in automotive project spending planned for this year, which is expected to grow as the year progresses. However, some of this planned activity will fall out--that is, be cancelled, placed on hold or shifted to a later date--and Pickering expects final spending for the year to come out to between $75 billion and $80 billion. Much of this spending has shifted from grassroot plants to in-plant spending, such as expansions, equipment additions and upgrades.
The average vehicle price is about 20% higher than it was in 2020. Projected final numbers for 2021 auto production are expected to be about 13 million units, down 3.5 million units from 2020. Much of this can be blamed on supply-chain issues, notably for semiconductors.
Semiconductors
Spending activity for semiconductor projects typically peaks every five to six years as new technologies are developed. However, the pandemic has changed this drastically, and spending in this sector is "through the roof," according to Pickering. At the onset of the pandemic, production and demand for vehicles declined, while demand increased for laptops, gaming and entertainment centers, and other electronic devices. As demand for vehicles has returned, semiconductors across the board often are unavailable when needed, and semiconductor manufacturers have broken the traditional five-to-six-year spending cycle to help meet this increased demand. The world's leading semiconductor manufacturers are definitely spending.
This sector is heavy in grassroot projects, but there also is a large number of in-plant expansions planned or underway.
In the U.S., Taiwan Semiconductor Manufacturing Company Limited (TSMC) (Hsin-chu, Taiwan), which has the majority of the world's market share and has plans to double production capacity over a three-year period, is developing a $12 billion plant in Arizona, and Intel Corporation (NASDAQ:INTC) (Santa Clara, California) is underway with a $20 billion plant expansion in the same state. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the detailed report on the TSMC project and here for the Intel project. Spending also is high in Texas, which is looking to become a hub for semiconductor manufacturing.
Pickering said, "The supply situation is improving slowly. By the middle of this year, it should have balanced itself out. We're not facing near the issues we were before, but capacity increases within the semiconductor industry have become the priority."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
