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Inflation to weigh on margin but could ease chip shortage

German auto supplier Bosch sees a possible easing of the global chip shortage in the second half of 2023 if demand dips under the weight of inflation, CEO Stefan Hartung said on Wednesday.

Inflation, at record highs in Europe, also meant the company had to increase revenues faster to keep its forecast margin for 2022 of 4%, equal to last year. Even then, Bosch would be far below its target margin of 7%, Hartung said.

“We need stronger growth than before to reach our margin goals… we are still far below our target. Independently of economic circumstances, we must make progress on this,” Hartung said.

The CEO said it was too soon to know how Europe’s gas supply situation would affect the company long-term given the unknowns around which pipelines would come online in time for next winter.

Hartung said Germany’s government was interacting more than previous administrations with business leaders to get an overview of how supply chains in industry were faring.

“It is good that business is being listened to in this situation,” Hartung said.

Natural gas makes up only a small proportion of Bosch’s direct energy use, with a shortage likely to have a greater impact on the company’s suppliers.

Bosch announced on Wednesday a new partnership with U.S.-based IBM to use quantum computing to establish which materials could replace critical minerals for carbon-neutral powertrains.

Unlike carmakers such as Volkswagen and Mercedes-Benz, Bosch was not considering entering directly into raw material sourcing to secure supply, Hartung said, adding its IBM collaboration was primarily about harnessing the potential of quantum technology.

“We will not be able to tackle climate change with today’s technology,” he added. Reuters

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