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Assembly at Volkswagen in Portugal: In the future, the Group will talk its suppliers more into it

Photo: Hugo Amaral / dpa

After the chip crisis, Volkswagen is realigning its procurement and wants to purchase important semiconductors directly from manufacturers in the future. As a result, the power of the suppliers decreases: From now on, Volkswagen will dictate to them which electronic components they install in central components. VW Chief Procurement Officer Dirk Große-Loheide and his Skoda counterpart Karsten Schnake hope that this will lead to more transparency in the supply chain. This, in turn, should ensure that the global demand and availability of the components can be better assessed, the board members explained on Wednesday during a conference call with journalists.

Procurement is supported by risk management that extends down to the level of individual electronic components. This should help to identify bottlenecks at an early stage in order to be able to take countermeasures in good time with technical alternatives. To this end, Volkswagen is setting up a newly created "Semiconductor Sourcing Committee" under Schnake's leadership. The Skoda board of directors had already steered the semiconductor task force of the entire group, in which more than 1000 employees from various departments had participated. The new committee, which will have about 40 members, will now advise the existing "Corporate Sourcing Committee" under the leadership of Große-Loheide on semiconductor issues.

In the past, it was largely up to so-called Tier 1 suppliers such as Bosch, Continental or ZF Friedrichshafen to decide which components they use. "Before 2022, we had been buying ECUs as black boxes for decades," Große-Loheide admits. In the meantime, Volkswagen is taking the purchasing of chips into its own hands. "We no longer rely solely on Tier 1 suppliers," emphasized Skoda board member Schnake, "we do more ourselves. And we're going to build on that."

There are agreements with several semiconductor manufacturers, the "Who's Who of the industry", including Infineon, NXP and the Taiwanese chip giant TSMC. A few years ago, Große-Loheide's predecessor Murat Aksel had complained that he could hardly get any appointments with the chip giants. "That has changed," Große-Loheide said on Wednesday. "We sit together every few weeks in Taiwan, Amsterdam or Wolfsburg."

Volkswagen also wants to compensate for short-term bottlenecks in the production of semiconductors by increasing inventories. The large number of chip variants that are in a car is to be reduced in order to streamline the software required for control. Theoretically, this reduces costs. However, this is not the driving force, VW made clear. "We don't measure the number of semiconductors we buy directly ourselves," Schnake said. "The only thing that matters is how critical the chips are for us."

Volkswagen doesn't even want to get involved in chip production. "We are doing this together with our partners who have been able to do this for a long time," Große-Loheide emphasized.

The global shortage of semiconductors has been a major problem for the Wolfsburg-based company - as well as for the industry as a whole - in recent years. Due to missing parts, the production lines had to be stopped and employees had to be sent on short-time work. Thousands of half-finished cars were stored in parking areas until the necessary chips were delivered. "When the first impacts came in January 2021, we first had to build up know-how," said Große-Loheide. Today, Volkswagen knows the products better and is able to "also initiate preventive measures if something goes wrong".

In the meantime, the situation has eased and production is running smoothly again. However, the shortage will probably not have completely disappeared next year. The semiconductor crisis will only be solved in the medium to long term, when significantly more chip factories go into operation in Europe, Audi's head of procurement Renate Vachenauer recently told a newspaper.

cr/sey/Reuters