Bosch bets big on global chip crisis

The global supply crunch of semi-conductors that has plagued new-vehicle supplies for more than 18 months and caused unprecedented customer waiting times is defying almost all efforts to curtail it and will knock millions of vehicles off global production schedules in 2022.

However, resolution is simply a matter of time and money, says renowned automotive parts supplier Bosch – a relatively new entrant to the microchip production sector – which is applying both to tackle the issue but is under no illusion that it will be an easy fix.

“What I'm hearing from my colleagues is that for some semi-conductors it's getting better, while for other semi-conductors, the outlook is still pretty grim for a while,” said Gavin Smith, the chairman and president of Bosch Australia.

“So I think it'd be a very brave person to make any prediction of how long this will be with us.”

Smith suggested that the critical logjam is simply one of backlog.

“I think the fundamental and underlying problem is that demand has outstripped the industry's ability to supply and the time it takes to make investments, build facilities and ramp-up and get in production is measured in years,” he said.

“The Bosch Dresden plant, from the time it was announced to the time it came on stream, was two and a half years or so. And we now talk about another 3 billion Euros ($A7b) going into next semi-conductor fab that will take years as well.

“So really, it’s just about the lead time to flex up.”

Smith said that while parts consolidation will reduce the number of chips required in a vehicle, those chips will work harder as production of electric vehicles (EVs) and autonomous vehicles (Avs) ramps up.

“We're moving from distributed electronics in a vehicle to centralised electronics,” he explained.

“So where a typical SUV or high-end passenger car has today between 70 and 80 individual electronic control units connected to the control systems, that will change dramatically when vehicle manufacturers have car control computers.

“That 70 or 80 might shrink down to half a dozen or a dozen, and they'll be covering things like powertrain, they'll be covering things like vehicle safety, they'll be covering things like infotainment and comfort.

“And when you do that, then certainly there's an opportunity to rationalise on the number of components.”

He countered that assertion by pointing out that cars are becoming far more sophisticated and the functionality that Bosch builds into the software to run on these electronic control units is getting more complex.

“Just project forward, when the average sedan has features and functions in it that will allow fully automated driving,” he explained.

“The computers required to do that are very sophisticated and very high powered. And the sensors that the vehicle has to have to be able to operate safely in all environments in all conditions are also very sophisticated.

“So whilst we might see a rationalisation of the number, I think the complexity and the function that they'll be providing will see a continuing increase in the use of chips.”

Images supplied: Bosch