SHOPSMART AUTOS – CUSTOMER INFORMATION – OCTOBER 19, 2021 -1
Semiconductor shortage and the U.S. auto industry Semiconductors have become so ubiquitous that it is easy to take them for granted until they are suddenly in short supply. Recent changes in global market demand for semiconductors has increased dramatically at a time when the world is moving towards technical innovations in renewable energy, electric vehicles and artificial intelligence. As America recovers from the economic toll the COVID-19 pandemic has caused, a critical shortage of this important electronic component has disrupted production in industries ranging from medical devices, computers, defense technologies, and in no small part, the U.S. auto industry. While there appears to be no quick antidote to this supply chain malaise, compared to other countries, the United States may be in the best position to help its businesses navigate global semiconductor supply chain limitations, albeit with political leverage rather than through domestic capacity. Semiconductors are essential to the production of integrated circuits or chips. A single chip can include thousands or even millions of semiconductors. The semiconductors are very difficult to manufacture since they are hundredths of times smaller than a human hair. Modern, technologically advanced cars use a multitude of sensors and controllers which rely on chips to send information throughout the vehicle. Automakers historically strived to limit inventories of parts, including semiconductors, to “just-in-time,” to reduce costs. When auto sales slowed, orders followed suit. Many semiconductor contract foundries switched from making “mature” chips for the auto industry to producing more technologically advanced “emerging” chips for the consumer electronics industry (e.g., 5G), which demand higher prices. The start of the pandemic saw orders for autos collapse, which resulted in orders for semiconductors from the auto sector to likewise rapidly decrease. As semiconductor orders decreased for autos, orders for semiconductors rapidly increased for consumer electronics as the workforce entered quarantine and a remote work environment. As the quarantine continued, auto sales grew by as much as 90 percent as measured from April 2020 to April 2021. While increased demand has been good for the auto industry, a critical shortage of semiconductors is causing Ford, General Motors and Stellantis to idle machinery and labor. The shortage has forced shutdowns at OEMs and has trickled down to parts suppliers which rely on OEMs for business. This is becoming one of the most disruptive chapter in the automotive industry’s long history and it looks like no relief in sight.Tags: 2019 Subaru Forester Touring, 2020 BMW iX3, 2020 Chevrolet Suburban, 2020 dodge charger, 2020 EQC, 2020 Ford Super Duty, 2020 Honda Pilot, 2020 Kia Optima, 2020 Mercedes Benz, 2020 Nissan Versa, 2020 Subaru WRX STI, Audi SUV, BMW, Brandon K. Hardison, Chevrolet Car, Chevrolet Sonic, Dodge charger, electric vehicles, honda, Honda Pilot, Hyundai SUV, Mercedes Benz, Nissan Rogue, SUV, upcoming car, Volkswagen, Volkswagen Tiguan SEL Premium R-Line, Volvo Car
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