Volkswagen’s looking to strike direct supply deals for chips
The german automotive group says that it has developed a new strategy for the procurement of parts with electronic components, as the company looks to secure supply.
The Volkswagen Group is reorganising its procurement of electronic parts and semiconductors to ensure supply over the long term and thus secure its position and competitiveness.
“A high degree of transparency in the semiconductor value chain – the exact knowledge of the parts used – enables us to better determine the global demand and availability of these components. This is underscored by risk management which, in future, will extend to the level of individual electronic parts and help us detect bottlenecks early on and avoid them,” says Dirk Große-Loheide, Board Member for Procurement of Volkswagen Passenger Cars, in a press release.
He continues to say that for strategically important semiconductors, Volkswagen will rely on direct purchasing from the semiconductor manufacturers,
In the past, electronic components like control units were procured and the Tier 1 suppliers were largely free to decide which parts they used. Going forward, in close collaboration and partnership with Tier 1 suppliers, the procurement group will define which semiconductors and other electronic parts are to be used.
Semiconductors are indispensable in the automotive industry. Not only are they elementary for mass production, but they are also innovation drivers and key for launching new products on the market.
The increase in demand for semiconductors from the automotive industry is the result of the increasing electrification of vehicles and the trend towards the growing use of assistant functions through to fully autonomous driving. Adding to this other industries have also upped its demand for semiconductors.
The value of electronic components in a vehicle is expected to more than double by the year 2030 from today's average of around EUR 600 per vehicle, says the company in the press release. Just to but all of this into perspective, in 1978, only eight semiconductors were installed in a control unit of a Porsche 911. Today, a Škoda Enyaq has around 90 control units with some 8,000 electronic components.
Today, the automotive industry is in fifth place among the major buyers with a global procurement volume for semiconductors of around 47 billion US dollars. By 2030, the industry is expected to secure third place with a market volume of around 147 billion US dollars.
