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Germany makes plea to Taiwan as chip shortage hampers autos industry

Lucy Harley-McKeown
·2-min read
ZWICKAU, GERMANY - SEPTEMBER 18: Workers assemble the new Volkswagen ID.4 electric sport utility vehicle (SUV) at the VW factory on September 18, 2020 in Zwickau, Germany. Volkswagen will officially present the ID.4 towards the end of September. In addition, Volkswagen also produces the smaller ID.3 at the Zwickau plant. Both cars are meant to lead the company towards mass sales in the electric car market and provide it with strong competition against rival Tesla. (Photo by Jens Schlueter/Getty Images)
Workers assemble the new Volkswagen ID.4 electric sport utility vehicle (SUV) at the VW factory on September 18, 2020 in Zwickau, Germany. Photo: Jens Schlueter/Getty Images

A shortage of semiconductor chips for cars is hampering German economic recovery, officials from the country have said, as they made pleas to Taiwanese manufacturers to help bump up supply to the auto sector.

According to a letter seen by news agency Reuters on Sunday, Peter Altmaier the German economy minister, asked his Taiwanese counterpart Wang Mei-hua to address the issue with suppliers.

He wrote: “I would be pleased if you could take on this matter and underline the importance of additional semiconductor capacities for the German automotive industry to TSMC.”

The country is home to the Taiwan Semiconductor Manufacturing Co which is the world’s largest contract supplier of semiconductor chips.

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A number of factors have choked car supply chains in recent months, and the delivery of semiconductors is high on the list. Legacy issues have come due to the former Trump administration’s actions against Chinese chip factories, but more recent issues have come to light for the car industry due to supply chain issues caused by Brexit.

Chip manufacturing capacity has been stretched to its limit around the world as laptops fly off shelves for working from home, and PCs and gaming consoles sell heavily. It has lead to chip firms such as Nvidia to warn of supply constraints.

Reuters reported that the shortage has put the breaks on production for Volkswagen (VOW.DE), Ford (F), Subaru (FUJHY), Toyota (TM), Nissan (NSANY) and Fiat Chrysler, among other manufacturers.

The issues had also been reported earlier in January when Credit Suisse analysts said in a research note that the chip supply issues may limit near-term auto production for the industry. The note also said that industry officials said they are prioritising production of higher-profit vehicles.

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Germany’s economy minister said he was looking to address issues for the short- and medium-term.

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