AI data centre boom risks roiling global carmaker supply chains
A data centre-driven memory chip shortage is forcing some suppliers to accept price hikes of over 100%
[LONDON] The auto sector is bracing for yet another potential supply chain disturbance, this time spurred by the rush to build data centres that train and develop artificial intelligence models.
A shortage of memory chips caused by the data centre boom already is leading some industry participants to acknowledge more than 100 per cent price hikes, UBS analysts led by David Lesne wrote in a report on Tuesday (Jan 20). Disruptions could kick in starting in the second quarter, he warned.
“We would not rule out some material downside risk” to global vehicle production, Lesne said.
The specific type of semiconductors at issue are dynamic random-access memory chips, known as DRAM. While automakers and their parts manufacturers depend on older, less-advanced memory chips than those going into AI servers and data centres, both rely on constrained supply of silicon wafers.
With demand for higher-end memory chips soaring, the car industry must act fast to shore up sourcing strategies.
“Automakers face a narrowing window to redesign systems and lock in supply,” Matthew Beecham, a research analyst at S&P Global Mobility, wrote in a Jan eight report. S&P analysts said the top three manufacturers of DRAM chips – Samsung Electronics, SK Hynix and Micron Technology – are prioritising the more profitable data centre segment over automotive applications.
Car manufacturers and suppliers that are more exposed to advanced driver-assistance systems and electronics components are at higher risk, the UBS analysts wrote. They said Visteon and Aumovio appear to be most at risk among suppliers, and see more downside for Tesla and Rivian Automotive than Ford Motor or General Motors.
Broad-based semiconductor shortages cost carmakers output of millions of vehicles during the Covid-19 pandemic. More recently, manufacturers including Honda Motor have had to idle production due to disruptions tied to Nexperia, the chipmaker wrested away from its Chinese owner by a Dutch court. BLOOMBERG
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