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More Chips Boost Manufacturing


FILE: A new type of 300 millimeter wafer with semiconductor chips and finished microchips of the semiconductor German manufacturer Bosch are seen in Dresden, eastern Germany. Taken 5.31.2021
FILE: A new type of 300 millimeter wafer with semiconductor chips and finished microchips of the semiconductor German manufacturer Bosch are seen in Dresden, eastern Germany. Taken 5.31.2021

An increased supply of semiconductor chips will reduce one burden facing the manufacturing industry, which is also battling raw material price inflation, a tight energy market and rising interest rates that are throwing a dampener on consumer demand.

ABB, a big supplier to the automotive industry, said semiconductor chip bottlenecks were now easing.

The Switzerland-based company, which competes with Germany's Siemens and France's Schneider Electric, is seen as a barometer of the global economy with its control systems and motors used in the transport industry and factories.

It anticipates double digit-comparable revenue growth in the next three months as the increased supply of chips means it can deliver factory robots, motors and drives ordered by customers.

"The good thing to know, it is easing up," Chief Executive Bjorn Rosengren said about the semiconductor shortages which he said were "severe" at the start of the year.

"Commitments from our suppliers are significantly better," he told reporters.

Production capacity at chip manufacturers was increasing, Rosengren said, while demand from other sectors, such as consumer electronics, seemed to be lower, allowing more chips to be allocated to industrial customers like ABB.

"I would not say the problems are over yet, but we have commitments for the second half which look quite good," he said.

Finnish telecom equipment maker Nokia said it expected the global semiconductor shortage to ease later this year.

"The overall direction in the semiconductor industry is positive at the moment, but we did continue to have constraints in the second quarter," Chief Executive Pekka Lundmark said.

Chief Executive Jonas Samuelson at Sweden's Electrolux said the supply situation, including for semiconductors, looked better for the third and fourth quarters versus the preceding quarters.

"Step by step we are coming back to a more normalized supply environment," he told analysts and journalists.

Volkswagen last month forecast a strong second half of 2022 and progress in catching up with rival Tesla as easing chip shortages start to offset supply chain bottlenecks and rising costs.

Carmaker Hyundai was also boosted by the easing of a global chip shortage, which helped it resume overtime and weekend shifts at domestic plants. It now plans to step up vehicle production in the second half to meet consumer demand.

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