Global Chip Shortage Expected to Affect the Production of Nearly 4 Million Cars

Carmakers are expected to build chip inventories in the long term 1 photo
Photo: Daimler
The global chip shortage is far from coming to an end, as the demand for electronics that skyrocketed in 2020 has made it impossible for foundries across the world to fill all their orders.
The automotive industry has been hit hard by the lack of chips. Many companies eventually turned to temporary halts of their operations simply because they lacked the necessary hardware to install on their cars.

Research conducted by consulting firm AlixPartners indicates that the global semiconductor chip shortage will continue to wreak havoc in the car business, with the total lost revenues reaching no less than $110 billion in 2021 alone.

Therefore, the company has revised its initial forecast when the company estimated the lost revenues would reach $61 billion, as it now expects the production of no less than 3.9 million vehicles to be impacted, as per a Reuters report.

In other words, there’s a good chance more carmakers will temporarily shut down their operations as they struggle to deal with the lack of chips.

And what’s worse is that nobody knows for sure when the whole thing would come back to normal, as neither carmakers nor foundries across the world can see the light at the end of the tunnel at this point.

On the other hand, other tech companies have already expressed their intention to begin manufacturing car chips, including Intel and Samsung.

Intel, for example, promised to begin operations in this industry in less than one year, while Samsung has joined forces with Hyundai for investments that would help deal with the lack of chips in the short term.

Automakers have so far avoided creating chip inventories, and doing this right now is pretty impossible, simply because foundries can’t even ship enough units for the cars that are now coming out of assembly lines. But in the long term, analysts expect the whole thing to change, as car manufacturers will likely create their own inventory and therefore make sure they have the necessary hardware for the entire output.
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About the author: Bogdan Popa
Bogdan Popa profile photo

Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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