Renault CEO says the chip shortage will last until 2022. Here’s what you need to know.

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The global chip shortage could continue to affect automakers next year, Renault CEO said.

Pau Barrena / AFP via Getty Images

Another day another prediction of the end of the global chip shortage. Renault CEO Luca de Meo told a French parliamentary hearing on Wednesday that he expected the shortage of automakers to continue until next year.

“There will be tensions in the system, even if production capacity improves,” said Bloomberg News, said the CEO of Renault (ticker: RNO.FRANCE). De Meo added: “We were successful in the first half of the year, but of course we lost volumes”, and this visibility on the offer changes every week.

Bad news for car buyers aside, investors should remember that the chip industry is not monolithic. A shortage of automotive semiconductors, therefore, does not mean that graphics or other types of high-end processors are in short supply for the same reasons. , or become widely available at the same time. But, at least for now, people continue to buy a lot more tokens than they make, almost everywhere.

For automotive chips, however, Raymond James analyst Chris Caso summed up the reason for the current and potential future shortage well: As the Covid-19 pandemic hit last year, analog chipmakers , which manufacture a significant number of automotive components, have reduced their capital expenditures. , and have not yet caught up.

Given that it will take several quarters for capital spending to result in a significant increase in production, Caso said he expects supply to remain quite tight until the end of the year, echoing, at least in part, de Meo’s comments in France.

In the second half of the year, Caso expects capital spending to almost double to around 9% of sales, compared to the period of the previous year. “Of course, this increase in investment is due to the underinvestment that occurred during the pandemic last year, and additional investment is needed to address the current shortages,” Caso wrote.

Demand for analog components still exceeds supply – and will continue to do so in 2021 – leading Caso to conclude that stocks of semiconductors such as

Analog devices

(ADI), on semiconductor (ON),

Texas instruments

(TXN), and others will peak this year. Next year, however, the situation will likely be different, as Caso predicts that the high capital spending will continue into the first half of 2022.

Shortages are expected to start easing afterward, suggesting that Renault’s top boss is on to something.

The PHLX Semiconductor index fell 1.5% in Thursday’s session.

Write to Max A. Cherney at max.cherney@barrons.com


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