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Volkswagen Reorganizes Semiconductor Procurement to Address Electronic Parts Shortage

Yusuf Balogun
Yusuf Balogun
Yusuf is a law graduate and freelance journalist with a keen interest in tech reporting.

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In a bid to address the rising demand for semiconductors in the automobile industry, German auto giant, Volkswagen Group has developed a new strategy for the procurement of parts with electronic components.

The firm said in a press release today that it is reorganizing its procurement of electronic parts and semiconductors to ensure supply over the long term and secure its position as the leader in terms of technology as well as competitiveness.

“A high degree of transparency in the semiconductor value chain – the exact knowledge of the parts used – enables us to better determine the global demand and availability of these components. This is underscored by risk management which, in future, will extend to the level of individual electronic parts and help us detect bottlenecks early on and avoid them, said Dirk Große-Loheide, Volkswagen’s Procurement Board Member.”

The Volkswagen Group initiated the COMPASS effort at the beginning of 2022, initially with the operational focus of securing the car programme, to address these massive hurdles and assure the semiconductor supply. On the basis of the lessons acquired from the semiconductor crisis, strategic action areas were identified, and long-term remedies were designed and put into place.

The trend towards the increased use of helper services through completely autonomous driving and the trend towards the electrification of vehicles are what are causing the greatest increase in demand for semiconductors. The use of cutting-edge semiconductors will also be a result of the accompanying advances, while the need for more widely available semiconductors will remain the same or even increase.

Previously, when purchasing electronic components like control units, the Tier 1 suppliers had a great deal of freedom in selecting the parts they wanted to employ. Volkswagen procurement will determine which semiconductors and other electronic components are to be used moving forward in close consultation and coordination with Tier 1 suppliers.

“For strategically important semiconductors and even the Group’s own planned developments in the future, we will rely on direct purchasing from the semiconductor manufacturers, Dirk Große-Loheide added.”

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