Microchip shortage idles more auto plants

“The effect of this is spreading farther and faster than a lot of companies were letting on initially,” Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, told Automotive News.

“Chips are so crucial to a modern vehicle that relying on one supplier for your chips opens the door to a problem like this,” Fiorani added. “Ensuring that supply is crucial to these companies. While they’re definitely nervous at this point, the true problems with the lack of supply is potentially down the road.”

Chipmakers did not anticipate that the auto industry would bounce back as quickly as it did from the impact of COVID-19, Fiorani said.

“When you have a large demand for your chips in so many different industries, you have to prepare ahead of time for where are buyers going to be,” Fiorani said. “People will buy a phone or video games before they buy a new car, so the chips went elsewhere, and when the economy bounced back quicker than expected and the automotive industry followed that, this was less expected than anyone really thought at the beginning.”

As the shortage worsened last week, 15 U.S. senators appealed to the White House to work with Congress. They asked President Joe Biden to secure the funding necessary to implement clauses related to chips in the National Defense Authorization Act. That move could theoretically spur production of chips in the U.S.

“We believe that the incoming administration can continue to play a helpful role in alleviating the worst impacts of the shortage on American workers,” the senators wrote.

But considering the time required to create new chip factory capacity, it is not likely that government intervention could bring fast relief to automakers.

Fiorani expects to see some semiconductor players increase their volumes.

But he added: “We’re not talking about making something like masks, that are relatively simple to make. It’s going to take a little longer for these companies to step up and create the proper parts.”

Read More: Automotive News

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