Why Semiconductor Shortages Will Be Back – and What European Industrial and Automotive Companies Can Do About It

SourceArcSemi Insights - 2 min read

Close-up of a semiconductor chip on a circuit board – symbolizing global supply chain challenges and resilience strategies.

Introduction

Since 2020, the semiconductor industry has been in constant crisis mode. Supply shortages slowed automotive and industrial production lines, delayed product launches and drove up costs across nearly every sector. While the peak of the crisis may feel behind us and capacity seems available today, assuming the problem is solved would be a mistake. Structural risks, fragile demand visibility and geopolitical uncertainty threaten supply security.

Structural Issues Remain

Despite headlines about unlimited capacity, european distributors’ order books (and thus manufacturer’s order books) are worryingly thin. Idle production capacity puts pressure on manufacturers, many of whom have already announced plans to scale back capacity by 2026. This reduction could quickly turn today’s availability into tomorrow’s shortage.

Lack of Demand Visibility

European Automotive and Industrial companies, under pressure to meet cash flow targets, have often delayed or avoided reserving semiconductor production capacity in advance. This short-term focus undermines visibility and puts them at risk of being pushed to the back of the line once global demand spikes again.

Geopolitical Risk

Trade restrictions, export controls and regionalization efforts are reshaping the semiconductor ecosystem. These uncertainties make it harder to predict where and when bottlenecks will emerge.

What Can Be Done

Build Transparency (Without Liability): Implement robust demand planning and maintain open communication with distributors to improve capacity reservation.

Strengthen Distributor Relationships: Treat distributors as strategic partners, not just order processors — early alignment can unlock supply during tight markets.

Second Sourcing: Avoid dependence by qualifying only a single supplier to reduce risk exposure.

Engage Interim Experts: Experienced supply chain leaders can help mitigate shortages and establish resilience faster.

Conclusion

Semiconductor supply challenges are not a short-term phenomenon — they are structural. Companies that act now to build resilience will be tomorrow’s winners. European Automotive and Industrial Companies, in particular, cannot afford to wait until the next global shortage hits.

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