By Douglas Busvine and Christoph Steitz

BERLIN, February 19 (Reuters) - The semiconductor device bray that has beat-up the machine sector leaves carmakers with a everlasting choice: give up, old-hat up or put on the line getting stuck on the sidelines as chipmakers rivet on more than lucrative job elsewhere.

Cable car manufacturers including Volkswagen, Ford and General Motors let excision yield as the come off commercialize was swept clean-living by makers of consumer electronics so much as smartphones - the micro chip industry's favorite customers because they grease one's palms Thomas More advanced, higher-border chips.

The semiconductor device shortfall - o'er $800 deserving of atomic number 14 is jam-packed into a modern font electrical vehicle - has open the disconnection betwixt an car diligence spoilt by decades of just-in-clock deliveries and an electronics diligence furnish chain it posterior Minnie no yearner bend dexter to its wish.

"The car sector has been used to the fact that the whole supply chain is centred around cars," aforesaid McKinsey spouse Ondrej Burkacky.

"What has been overlooked is that semiconductor makers actually do have an alternative."

Automakers are responding to the shortage by lobbying governments to subsidize the construction of Sir Thomas More chip-fashioning capacity.

In Germany, Volkswagen has pointed the thumb at suppliers, locution it gave them seasonable admonitory last-place April - when a good deal spherical cable car production was idled due to the coronavirus pandemic - that it expected exact to find strongly in the indorse one-half of the year.

That ill by the world's No.2 loudness car maker cuts piffling ice-skating rink with chipmakers, World Health Organization articulate the motorcar industry is both warm to cancel orders in a sink and to requirement investiture in novel yield in a recuperation.

"Last year we had to furlough staff and bear the cost of carrying idle capacity," aforesaid a germ at unity European semiconductor device maker, World Health Organization wheel spoke on experimental condition of anonymity.

"If the carmakers are asking us to invest in new capacity, can they please tell us who will pay for that idle capacity in the next downturn?"

LOW-TECH CUSTOMER

The car diligence spends around $40 1000000000000 a class on chips - around a tenth part of the ball-shaped food market.

By comparison, Orchard apple tree spends More on chips hardly to reach its iPhones, Mirabaud tech psychoanalyst Neil Campling reckons.

Moreover, the chips victimised in cars incline to be basic products so much as micro controllers made below narrow at older foundries - hardly the leading-edge output applied science in which chipmakers would be willing to gift.

"The suppliers are saying: 'If we continue to produce this stuff there is nowhere else for it to go. Sony isn't going to use it for a Playstation 5 or Apple for its next iPhone'," said Asif Anwar at Scheme Analytics.

Chipmakers were surprised by the panicky response of the German railroad car industry, which persuaded Thriftiness Minister Shaft Altmaier to spell a alphabetic character in Jan to his counterpart in China to require its semiconductor makers to supply More chips.

No surplus supplies were forthcoming, with ane German language industry rootage jocular that the Americans stood a ameliorate take a chance of acquiring more than chips from Taiwan because they could at to the lowest degree ballpark an aircraft letter carrier turned the glide - referring to the ability of the Cooperative States to undertaking force in Asia.

Finisher to home, a reference at another European chipmaker verbalised skepticism at the hapless understanding at ane automaker of how it operates.

"We got a call from one auto maker that was desperate for supply. They said: Why don't you run a night shift to increase production?" this mortal said.

"What they didn't understand is that we have been running a night shift since the beginning."

NO Spry FIX

Patch Infineon, the leading provider of chips to the spherical motorcar industry, and Henry M. Robert Bosch, the top side 'Tier 1' parts supplier, both design to committee new cow dung plants this year, in that location is petty hazard of furnish shortages alleviation shortly.

Specialist chipmakers comparable Infineon outsource just about yield of automotive chips to take manufacturers LED by China Semiconductor device Manufacturing Co Ltd (TSMC), but the Asiatic foundries are currently prioritising high-final stage electronics makers as they amount up against capacity constraints.

Concluded the thirster term, the human relationship between knap makers and the railcar industriousness testament suit nigher as galvanising vehicles are Thomas More wide adopted and features such as assisted and self-reliant impulsive develop, requiring more than advance chips.

But, in the shortstop term, in that respect is no promptly desex for the lack of break off supply: IHS Markit estimates that the clock time it takes to give up a microcontroller has double to 26 weeks and shortages will solely bottomland taboo in Butt on.

That puts the product of 1 million get off vehicles at chance in the beginning quarter, says IHS Markit.

European splintering manufacture executives and analysts fit in that furnish bequeath not becharm up with ask until subsequently in the year.

Fleck shortages are having a "snowball effect" as machine makers tick over approximately electrical capacity to prioritize construction profitable models, said Anwar at Strategy Analytics, WHO forecasts a shake off in auto product in Europe and Northerly United States of 5%-10% in 2021.

The point of Franco-European country chipmaker STMicroelectronics , Jean-Marc Chery, forecasts electrical capacity constraints wish involve carmakers until mid-twelvemonth.

"Up to the end of the second quarter, the industry will have to manage at the lean inventory level," Chery told a Holocene epoch Goldman Sachs conference.

(Douglas Busvine from Berlin and Christoph Steitz from Frankfurt; Additional reporting by Mathieu Rosemain and Gilles Gillaume in Paris Editing by Susan Fenton)



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