The Auto Industry Is Running Out of Chips - PCMag

(Photo by Thomas B. from Pixabay)

Vehicle manufacturers are increasingly shipping vehicles full of new technology, be that to wirelessly link them to your smartphone, provide GPS navigation, EV system management, or to allow for self-driving features. But there's a problem: none of them can get enough chips to meet demand.

As ABC News reports, Ford, Fiat Chrysler, Nissan, Toyota, and Volkswagen have all been hit by a shortage of semiconductor parts required for their vehicles. The result is production delays across the industry this year, meaning there could be a shortage of vehicles in certain categories.

The shortage has occurred as a side effect of the coronavirus pandemic. Last year, auto sales slowed considerably as governments around the world asked people to stay at home and businesses closed their doors. This led to the semiconductor industry refocusing production to consumer products, meaning the auto industry was left to rely on existing inventory and sourcing new stock with increasing difficulty.

Kristin Dziczek, vice president of industry at the Center for Automotive Research, said "There have been warning signs about his for months." While Toyota spokesman Scott Vazin confirmed it's an industry-wide issue and that, "We are evaluating the supply constraint of semiconductors and developing countermeasures to minimize the impact to production."

The immediate reaction to the shortage is to shut down production at factories for short periods of time this year. Fiat Chrysler has already done this at factories in Brampton, Ontario and Toluca, Mexico. Toyota has slowed production of its Tundra pickup at a factory in San Antonio, Texas, and Ford is temporarily stopping production in Louisville, Kentucky. Volkswagen is slowing down production, and Nissan is adjusting its production in Japan.

Lead times on sourcing chips is six to nine months according to Dziczek. The short term impact of the shortage for consumers is the potential for certain cars, trucks, and SUVs to be in short supply and for manufacturers to focus production on the most popular models. However, if we continue to face restrictions due to the pandemic, it seems unlikely many people or businesses will be looking to purchase new vehicles this year.