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Continental’s answer to microchip crunch is flexible design

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BERLIN — Continental has decided against manufacturing its own semiconductors, despite the global microchip shortage.

“We looked into it, but decided against it,” Continental CTO Gilles Mabire was quoted as saying by Automotive News Europe sister publication Automobilwoche.

Mabire told the publication that he expects the semiconductor situation to improve in the coming year.

Instead of making its own chips, the company plans to work more closely with its suppliers and customers and change the chip design so that it can be altered more quickly if necessary.

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Chips are in short supply everywhere and semiconductor technology varies greatly from component to component, Mabire told Automobilwoche.

“You can’t solve that with in-house manufacturing in a single area,” he said. “You need specialists for that, and the automotive sector alone is simply too small for this.”

He also said that reducing the number of semiconductors installed in vehicles would not solve the supply bottlenecks.

“If we look into the future, the switch to central computers may indeed reduce the number of processors and chipsets,” Mabire said. “But at the same time, complexity and performance levels increase dramatically. So, I find it hard to imagine that we will get by with fewer semiconductors.”

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The most important lesson from the chip crisis is ” we have to plan much more long-term,” Mabire said. “We have to work more closely with suppliers and with our customers here.”

In the future, he said, Continental wants to take the issue of semiconductor supply into account “as early as the strategic planning stage, so that we can give a signal early enough if there might be a bottleneck.”

In addition, he said, the company wants to change its chip design “in order to become more flexible and be able to switch quickly to another supplier.”

Mabire said that while he expects the situation “to remain tight” in 2022, he predicted the chip crunch would begin to relax starting in 2023.

Continental rival Bosch has gone in a different direction, opening a 1-billion-euro ($1.2 billion) chip plant in Germany in June, in a record investment by the supplier as it gears up for the latest electric and self-driving cars.

Continental ranks No. 6 on the Automotive News Europe list of top 100 global suppliers, with 2020 sales to automakers of $29.7 billion.

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