Phonemakers beat carmakers in battle for chips

The world's big carmakers are waking up to an uncomfortable truth.

When there's a shortage of silicon chips - as there is right now - they lose out to big tech.

Major brands including Volkswagen, Ford and General Motors have all had to cut output as semiconductors run short.

About $800 dollars of silicon goes into a modern electric vehicle.

The industry as a whole spends about $40 billion on chips every year.

But right now the silicon is being swept up by makers of smartphones and other consumer electronics.

They're enjoying a boom in demand from consumers stuck at home.

And chipmakers prefer Apple, Sony and the like as customers.

They spend more, and buy more advanced semiconductors.

One tech analyst told Reuters that Apple spends more on chips than the entire auto industry.

German carmakers persuaded the country's economy minister to press Taiwan for action on chip supplies.

But with little apparent result.

Chipmakers complain that car firms don't understand their business.

One told Reuters an auto firm had suggested it run a night shift to increase output - not realising that 24-hour production was the norm anyway.

Now Infineon - the biggest supplier of chips to the car industry - will commission a new plant this year.

But Asian semiconductor foundries continue to give priority to big tech.

Analysts at IHS Markit estimate that leaves production of a million vehicles at risk in the first quarter.