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Andrew Leech Founder and Managing Director Mercia Fleet Management

Andrew Leech

I’ve been greening company fleets for over a decade. Ready to solve your fleet puzzle?

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What's Going on with Semiconductors?

A year ago, only specialist engineers had heard of semiconductors. Today, it’s an everyday headline. While few of us actually know what they do, most of us know that semiconductors are causing huge delays, in everything from phones to cars to vans. What is going on with semiconductors and where do we go from here?

A semiconductor is the building block on which circuits themselves are built. Without them, we can’t make laptops, cars, vans, planes, phones, smart speakers, remote controls, the list goes on! To put it in context, before the crisis, semiconductor manufacturers made 150 per person on the planet, in just one year!

The shortage has been anticipated for some time. Around this time last year, millions of optimistic children had some ambitious demands on their letter to Santa. And my son was no exception. The PS5 was a demand that Santa simply couldn’t meet; even the Christmas lights needed semiconductors!

Besides Santa’s failure, my household budget meant my son would not have had a PS5 anyway, even if we had no semiconductor shortage. He has since claimed my PS4. As a dad of 3, I have no time to play it anymore, so he is welcome to it. If Santa can’t keep up with demand, how can we? Especially when one of the largest semiconductor plants in the world closed in March following a huge fire!

We’re approaching that time of year again!

The kids are demanding PS5’s and businesses are demanding vehicles, there’s no end in sight. Or is there? Well, this year again, Santa won’t be much help. His elves are hardworking, but the productivity increase is too great for them alone!

China and Europe are wading into this market and bringing huge production to bear. Although, this may not be in time for Christmas. Next summer though, I think semiconductors will slip right back into the headline wilderness.

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FAQs

Here’s some of the most frequently asked fleet management questions.

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Why are semiconductors important for the automotive industry?

Semiconductors are essential for modern vehicles, powering critical systems like engine control units, advanced driver assistance systems (ADAS), infotainment, and electric vehicle batteries. Without them, the technology that makes cars safer, more efficient, and smarter wouldn’t be possible.

Why is there a global semiconductor shortage?

The shortage has been driven by a combination of factors, including pandemic-related supply chain disruptions, increased demand for electronics, geopolitical tensions, and the slow, complex nature of semiconductor manufacturing. This has significantly impacted vehicle production worldwide.

How is the semiconductor shortage affecting fleet operators?

Fleet operators are facing longer vehicle lead times, higher prices, and reduced availability of certain models. Many are adapting by extending lease terms, focusing on maintenance to extend vehicle life, or exploring alternative mobility solutions.