What is a semi-conductor?

As the name suggests, a semi-conductor is a material that partly conducts a current. Its conductivity level sits between conductors (mostly metals) and non-conductors, or insulators. Semi-conductors are often made of silicon and are an integral component in the microchips that are part of many electronic devices we use every day. Smartphones, computers, radios, TVs, whiteware and gaming consoles all rely on them, as do entire industries such as banking, public transport, communication and medicine.

These microchips are also fundamental to the operation of modern cars which use thousands of them in their ECUs (Electronic Control Units) to run many of the on-board systems, including powertrains, braking, safety, communication and entertainment. A modern vehicle cannot operate without microchips, which in turn cannot be made without semi-conductors.

Why is there a shortage?

The Covid-19 pandemic has created number of major problems in the supply of semi-conductors. The first was the closure of many electronics factories due to lock-downs and public safety, along with the drop in demand for products. This was followed by a huge surge in demand for devices such as personal computers, TVs and smartphones as people were confined to home for both work and entertainment. Semi-conductor suppliers moved the bulk of their supply to these areas.

International freight problems have also played a part in supply issues, as has the temporary closures of large semi-conductor factories in Texas due to storms and power outages. Most recently a huge fire at a Japanese manufacturer has further impacted supply.

What about buying a new car?

When Covid-19 first hit, automotive manufacturers cancelled their orders for microchips as demand for new vehicles dropped, however the industry has bounced back much quicker than predicted. As populations come out of lock-down there has been a far greater demand for new vehicles than expected. While many industries carry large parts stock, vehicle manufacturers often rely of getting their parts ‘just in time’ in order to minimise storage requirements. Delays in the supply chain can therefore be catastrophic to their production process. Microchip manufacturers whose focus has been on supplying consumer electronics industries are now working hard to catch up with supply in other areas however this has, and will continue to, cause delays in automotive manufacturing.

What can I do?

The good news is a number of manufacturers in New Zealand do have stock of new vehicles and have more on the way, but in many cases the best advice is to make sure you’re in the queue. Registering your interest in a new model and/or pre-ordering a new vehicle means that the dealership and in turn the manufacturers and distributors have an idea of demand. They are then able to place orders and will be able to give you a delivery timeline.

The shortages and delays are not forever. Hard work at the semi-conductor manufacturer level and patience at the consumer end will mean a resolution to the problem, but if there’s something you’re interested in and it’s not currently available, it’s important to let the dealership know so you can be sure of securing it as soon as it is.