Car manufacturers have to deal with a global pandemic causing a drop off in demand, ever tightening emissions regulations and a technology shift to electric vehicles. But the biggest threat to their business could come from the game consoles such as the Playstation and Xbox.  

The New York Times has reported that strong demand for gaming systems and other personal electronic devices due to COVID-19 lockdowns has put a strangle hold on supplies of semiconductors, meaning car makers all over the world are facing a shortage of crucial chips.

From Toyota in China to Fiat Chrysler in Canada and Mexico and Ford in the USA to Honda in Swindon, vehicle production lines have come to temporary stops because as they wait for semiconductor supplies.   

Most new cars now feature well over 100 semiconductors which are used in engine and transmission controls, as well as on touchscreens and digital connectivity features. However, when the COVID crisis hit most car makers cut their semiconductor orders as they anticipate a collapse in new vehicle demand.  Although global sales did fall by around 25% in 2020, demand for new cars bounced back far quicker than anticipated, especially in Far Eastern markets.

Meanwhile semiconductor manufacturers, largely based in China, switched production to meet rising demand from makers of game consoles, laptops, phones and tablets, experiencing a surge in demand as much of the world stayed at home. Trade disputes between China and the US also added to the problems.  

Experts believe it will take six to nine months for the automotive industry to recover the full semiconductor capacity it needs. This is likely to mean more periodic temporary production line shutdowns and buyers waiting longer for their new cars.