Rise and fall of semiconductor demand during the pandemic
The automotive market was significantly affected during the pandemic. A decline in vehicle sales and manufacturing facility closures resulted in companies cutting back on their orders for semiconductors. This reduction in demand was quickly taken up by consumer electronics suppliers, hyperscale operators, and telecommunications providers who needed to satisfy online working and entertainment needs. When demand for new vehicles finally did return, carmakers were unable to source enough semiconductors, forcing them to restrict production once more.With few semiconductors to spare, automakers have had to change their production strategies. Some car manufacturers have shut down plants producing cheaper car models, while prioritizing the manufacturing of expensive and more profitable models—although often without special features, such as heated seats. Despite these efforts, more than 11 million vehicles had to be removed from production in 2021. Consequently, global car sales in 2021 were down by more than 12 percent compared to 2019, resulting in a loss of some 210 million U.S. dollars in revenue for the global automotive industry.
