09 Mar 2021 -
 Industrial

Infineon tells automotive industry to hold more stock of vital chips

Europe’s biggest semiconductor company, Infineon, has warned car companies to change their procurement model and not expect them to take all the risk of holding inventory, reports The FT.

Infineon is one of the world’s leading suppliers of microcontrollers and sensors that power modern vehicles whose customers include tier 1 auto suppliers Bosch, Continental and ZF, says the FT.

“The auto industry cannot say: ‘OK fine, we don’t need [any more chips], and then come back later and say: ‘Now we need them’,” chief executive Reinhard Ploss told the Financial Times. “They have to consider the long lead times [in the semiconductor sector] of about half a year.”

Ploss told The FT that the car industry could not expect chipmakers such as Infineon to “take all the risk of holding the inventory”. “That would be an unbelievably high cash flow risk for us.”

The FT reports that shortages have led some car brands, including Porsche and Mercedes, to take another look at their supply chains, which for decades have relied on “just-in-time” deliveries, and consider holding larger stockpiles.

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