Semiconductor Chip Shortage: What’s Going On?

Essential vocational fleets haven’t stopped working since the pandemic started, and that means they still need vehicles to get their jobs done. With the semiconductor chip shortage, it’s been more difficult to acquire one of their most vital tools.

Mathew Long, head of product success for North America with Verizon Connect, part of Verizon Business, gave Work Truck insight into how fleets are coping in the meantime.

WT: What caused the current semiconductor chip shortage?

LONG: We can look at the current state of our environment globally, with regards to the state of the pandemic. We think about what happens naturally in the form of consumers who are suddenly stuck in their houses. They’re seeking out electronic devices. Automotive factories are thinking about what they should do in regards to the shortage.

It’s a classic supply and demand situation where you’ve got a certain number of automotive manufacturers who have shut down in a particular capacity. You also have consumer electronics companies that were gearing up to be able to sell all sorts of different devices, whether that’s your latest tablet, laptop, or phone. This, obviously, caused a ramp-up in the overall use of semiconductor chips.

Unfortunately, that has affected automotive manufacturers who are now seeking to move full-steam ahead to provide the overall needed supply for the demand. Now we have automotive manufacturers who have vehicles that don’t have semiconductor chips they need, potentially sitting in warehouses or on a lot, waiting on the overall quantity of the semiconductor chips and the components therein to be placed in the vehicles.

This is making it harder to find vehicles and way more expensive to upgrade commercial fleets, making maintaining existing vehicles even more important.

WT: How can predictive and preventive maintenance solutions be a stopgap solution in today’s climate?

LONG: When it comes to the truck shortage, you think about the challenge a fleet owner faces in seeking out a new set of vehicles for their fleet when they’re unavailable or don’t have the opportunity to order ahead and know the manufacturer is going to come through. It’s natural for that fleet owner to be thinking about alternatives. That typically comes down to a bit of a maturity curve perspective.

When we think about a maturity curve, it frequently starts with something like a reactive state and goes all the way to something like predictive, where you’ve got a couple of things in between along the lines of conscious and preventive.

When I think about reactive, I’m thinking about a piece of equipment that has failed. Ultimately, I fix it when it happens. It’s certainly not the state a fleet owner wants to be in. Then you go into this conscious state where you’re thinking, “I could rebuild a certain amount of the components within a particular vehicle using a certain number of spare parts,” when those failures occurred just to keep a particular fleet alive. Or preventive where there are inspections and aspects where technology can help create a routine around historical elements.

Then you get to predictive, and suddenly you’re looking at different sensor technology, and machine learning comes into play to help you understand what’s going on with the actual vehicle itself and getting ahead of the game to understand proactive replacement.

WT: Is there an end to the shortage in sight right now?

LONG: It’s going to come down to the obvious demand meeting the supply coming back into a leveled perspective, where you don’t have such an offset in an extreme fashion. I do genuinely believe the overall chip shortage will be solved, but I don’t have a specific timeline in mind. I don’t think anybody can forecast that with exact detail.

I do think as we round out Q4 into 2022, we are going to start to see the overall increase in production. We’re going to see a dent in pushing towards capabilities whereby we can go ahead and create more chipsets.

WT: What additional advice do you have to help vocational fleets make it through this current crisis?

LONG: If they’re thinking about different technology, if they’re not already leveraging something like a GPS tracking platform, certainly that helps because it creates a certain level of visibility across their fleet.

I think it starts with basic safe driving. If you think about what leads to particular challenges with vehicles, it can have its issues based on classic maintenance problems. In an ideal world, fleet owners are building a solid safety program and a culture around safe driving habits.