Volkswagen Reorganizes Semiconductor Procurement

August 27th, 2023 by

Photo credit: Volkswagen

Volkswagen made decisive steps towards redefining the way the company procures new electrical components and semiconductors in order to secure a long-term supply. The modern industry continues to constantly evolve due to the high demand for electrical vehicles with top of the line connectivity. To secure its position as one of the leaders in technology and connectivity, the Volkswagen brand has developed a new strategy for the procurement of electronic components directly from Tier 1 suppliers. In the past, Volkswagen procured various electrical components, such as control units, and the Tier 1 suppliers were in charge of choosing the types of parts to be used in the vehicles.

“A high degree of transparency in the semiconductor value chain—the exact knowledge of the parts used—allows us to better determine the demand and overall availability of these components. This is reflected in risk management, which in the future will be extended to the level of individual electronic components and “will help us to detect bottlenecks early and avoid them,” said Dirk Große-Loheide, Member of the Board of Management for Volkswagen Passenger Cars and member of the Group Management Board.

In the automotive industry semiconductors have become an indispensable material, as they support the mass production of vehicles and are also a key driver for product innovation. The demand for semiconductors is increasing due to the growing electrification of vehicles and the increased use of driver assistance functions. The constant evolution and corresponding innovations by the industry sector to increase the use of next-generation semiconductors will increase the demand for common semiconductors. Electric vehicle components will begin to have a higher value by 2030.

According to the assessment made by the Volkswagen brand, the importance of semiconductors across the automotive market continues to rise. The automotive industry is currently the fifth largest purchaser of semiconductors, the automaker plans to reorganize the procurement of electronic components and semiconductors. This is a strategic move that makes the company able to secure a long-term supply, demonstrating Volkswagen’s ability to lead and direct the automotive industry into a new world full of innovation and a lot of change.

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