Automotive Industry Competes with AI for Chips, Supply Tightens Further
The global automotive industry is once again grappling with competition for semiconductor chips. This time, the main competitor comes from the artificial intelligence (AI) sector, which is developing rapidly.
Kukuh Kumara, Secretary General of the Indonesian Automotive Industry Association (Gaikindo), stated that this phenomenon is beginning to be felt amid the increasing demand for chips in AI technology. The current situation bears similarity to the chip crisis during the pandemic, but with different causes.
“Alongside rising plastic and fuel costs, there’s also competition over chips. It’s similar to the pandemic era, but now the chips are shifting focus to AI,” he told CNBC Indonesia on Tuesday (7/4/2026).
Global chip manufacturers are now tending to prioritise the AI sector because it offers higher economic value. This makes the supply for the automotive industry increasingly limited.
“Because the price might be more attractive for AI compared to conventional ones for cars,” he said.
The massive surge in AI demand is also altering the direction of chip production distribution in the global market. As a result, the automotive industry must compete more fiercely to secure supplies.
Kukuh acknowledged that the exact starting point of this shift cannot be pinpointed specifically. However, its impact is already being felt by industry players.
“I’m definitely not sure when it started. But this increase in AI demand is also affecting chips,” he explained.
This situation adds complexity to the challenges facing the automotive industry, especially amid an economy that has not fully recovered. Limitations in chip supply could disrupt global vehicle production.
On the other hand, the industry does not yet have quick solutions to address this issue. The process of relocating or diversifying chip suppliers is deemed not easy to accomplish in a short time. Kukuh hopes this condition does not last long so that the supply chain can return to normal.
“This increase in AI demand is impacting chips. Hopefully, this passes quickly,” he concluded.