Lack of chips a menace to industry, say central bank analysts

Industrial production has not reached the pre-pandemic level despite strong growth.

National Bank of SlovakiaNational Bank of Slovakia (Source: Archive of Sme)

Advance indicators of industrial production in the Eurozone suggest strong productivity, but real data on production lags behind.

As analysts of the National Bank of Slovakia said, industrial production has not reached the pre-pandemic level despite strong demand, more or less stagnating in 2021, the SITA newswire reported.

The shortage of chips has become a menace for many producers. Without these tiny components, producers cannot manufacture their products or satisfy orders. The automotive industry is significantly hit in the Eurozone.

At the beginning of the pandemic, the production of chips decreased when the closure of the economy also struck the producers of these components. Together with the increase in home office and studying from home, the demand for electronic devices also grew, such as for laptops, phones, tablets and game consoles. All these products are dependent on chips.

The growing value of cryptocurrencies also had a marginal, but not negligible impact, according to the analysts. The growth motivates the mining of cryptocurrencies and for mining it is necessary to invest into better-performing computers and processors, also dependent on chips. The trade war between the US and China also played a role.

Back to normal next year

The production of cars in the Eurozone in the first half year 2021 decreased by more than 30 percent, as many producers have to temporarily cut production. One of the reasons is the fact that supplies to mobile phones or notebooks are more attractive for chip producers.

Their production volumes incomparably exceed the production of cars. The producers of chips are thus giving preference to these purchasers, car production dropping around the world.

“This problem did not bypass Slovakia, where it was visible in the significant fluctuation of production,” the analysts’ commentary reads, as quoted by SITA.

Cars become scarce commodity due to microchip shortage Read more 

The problem related to the lack of chips will not go away this year, analysts claim. Their production is very demanding in terms of capital, which limits the swift increase of the offer. A realistic outlook entails that the situation could go back to normal in the second half of next year, according to analysts.

Following the improvement in the supply situation for chips, the production of cars, as well as other manufacturing sectors, should support the economic performance of the Eurozone. The growth of production will not only be focused on satisfying late or new orders, but also on the renewal of stocks.

Top stories

No single list of foreigners who are entitled to vote in Slovakia exists.

It is a simple question. How many foreigners vote in Slovakia?

The million-dollar question the state and towns can hardly answer.

24. sep
Reconstruction work on the Monument of Liberation and Victory, unveiled in 1955 in the Dargov mountain pass, which commemorates the liberation of eastern Slovakia from Nazism.

Police have finally found a very old book, arresting alchemy buffs

Set out on a Malá Fatra hike, avoid the Bratislava cable car from Monday.

24. sep
Not all stretches of the long-awaited D4/R7 bypass of Bratislava will open as originally planned.

Problems with Bratislava bypass opening continue

Not all of its stretches will be put into operation on Sunday as officially planned.

24. sep
Bratislava Mayor Matúš Vallo speaks to foreigners at [fjúžn] festival's "Ask the Mayor" event.

Foreigner’s community has a big voice, but it needs to be more organised

Bratislava Mayor Matúš Vallo addressed the questions and concerns of foreigners in Bratislava during a special Q&A.

23. sep
Skryť Close ad