Chip shortage in German industry intensifies - Ifo Institute: One in ten companies reports supply problems
Material shortages for German manufacturers of electronics and optical products worsened in October as global controls on rare earth components tightened, the Ifo economic institute reported.
Rare earths, essential for the production of semiconductors, sensors and other advanced components, are increasingly subject to trade restrictions, particularly from China, which dominates global supply.
In Germany, about 10.4% of companies in the sector reported supply disruptions in October, compared with 7% in July and 3.8% in April, according to the institute.
“Control mechanisms and trade restrictions for rare earths are having their effect,” the head of Ifo’s surveys announced. “If this trend continues and worsens, it will also negatively affect economic growth.”
In the manufacturing sector as a whole, only 5.5% of companies reported supply problems, the institute added.
German industry has experienced major disruptions in supply chains, while European politicians are trying to reduce dependence on critical materials. They aim to diversify supply chains and increase domestic production of rare earths, but this is a process that takes time.
In addition to affecting the electronics industry, shortages could lead to price hikes and delays in the production of other technological devices. Analysts warn that companies need to plan long-term strategies to avoid over-reliance on imports.
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