Global car sales are expected to grow marginally by 13% to over 83 million units this year compared to 2020, capped by a shortage of chips, according to industry sources. The fight over semiconductors between electronics suppliers and automobile OEs will continue to the second half of 2021.

Car sales have been in a slump since 2018. Demand for cars finally bounced back this year as vaccines rolled out, but the undersupply of semiconductors has stifled car production around the world. OEs are worried that prolonged undersupply of car chips could make them lose customers. As the car industry goes through electrification, undersupplied car chips could cause a series of troubles for the industry - from cut-throat market competition to the rising unemployment rate.

As indicated by industry sources, by the third quarter, while large car chipmakers Infineon, NXP, and Renesas have gradually picked up production and contract chipmakers TSMC, Vanguard International Semiconductor Corporation (VIS), United Microelectronics Corporation (UMC), and Global Foundries (GF) are helping to manufacture car chips, the undersupply is only improving at a very slow pace.

In some countries, the car industry reflects directly their labor market conditions and economic growth. The governments in the EU and US and many others are putting more and more effort to get their hands on car chips. The chipmakers, in the meantime, are trying to please everyone by distributing as evenly as possible.

To make things worse, Malaysia's resurgence of COVID is hindering the production of standard chips for cars. Japanese OEs are also seeking more car chips as they are running out of inventories. China recently investigated stockpiles of chips at traders, hoping to increase circulation. Despite all efforts, OEs are desperate to secure 800 million units this year.