By on February 4, 2021

While the Great Semiconductor Shortage of 2021 probably isn’t going to the defining historical topic of the modern era, it’s presently doing a number on the automotive industry. Volkswagen Group, Ford, Mazda, Nissan, Subaru Corp., Toyota, and Stellantis have all reported the need to scale back production this year.

On Wednesday, General Motors said that it would also have to handle the issue by closing down four plants next week. Affected sites include Kansas’ Fairfax Assembly, Ontario’s CAMI Assembly, and Mexico’s San Luis Potosí Assembly. GM Korea will likewise be operating Bupyeong 2 at half capacity, according to Reuters

From Reuters:

GM did not disclose how much volume it would lose or which supplier was affected by the chip shortage, but said the focus has been on keeping production running at plants building the highest-profit vehicles — full-size pickup trucks and SUVs as well as the Chevrolet Corvette sports car. GM said it intends to make up as much lost production as possible.

“Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021,” GM spokesman David Barnas told Reuters in a statement.

“Semiconductor supply for the global auto industry remains very fluid,” he added. “Our supply chain organization is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM.”

The resulting lost production around the globe is currently estimated to account for 564,000 vehicles, according to AutoForecast Solutions. However, the total number could caress 1 million units if the chip supply doesn’t improve.

But why is there a shortage in the first place?

Other than the obvious answer of COVID-19 restrictions mangling the supply chains of most industries, general demand for semiconductors has skyrocketed. Your author recently found himself needing to purchase some ear protection and noticed that even the low-end muffs offered Bluetooth in addition to the auxiliary audio jack. That swiftly led to the realization that practically every new product comes equipped with Wi-Fi and/or Bluetooth these days. Combine that Huawei going on a chip-buying spree ahead of the U.S. semiconductor ban and the broader issue begins to come into focus. We’re cramming chips everywhere they might fit and simply can’t build them fast enough.

This has also left automakers tugging at their collars when discussing what Q1 might look like. Volvo Cars was the latest, noting that it had secured a healthy supply of semiconductor chips for the next few weeks as it fretted about the future. “So, short-term no disturbance … But there is of course a big risk that it could come here during the first quarter. But it is very hard to forecast,”  Volvo CEO Håkan Samuelsson explained on Thursday.

With Qualcomm having just announced that it’s also having trouble meeting demand as chip shortages continue to spread, Samuelsson’s words likely apply as much to Volvo as it does the automotive sector as a whole.

[Image: General Motors]

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9 Comments on “Chip Shortage Expands, GM Forced to Idle Factories...”

  • avatar

    If you are interested in ‘modern’ automobile manufacturing, Episode 1 of this series is required viewing:

    It walks through VW’s Wolfsburg plant, and includes a segment on modern supply chains.

    Also recommended is this 3-part series which is mostly Mini’s (BMW’s) Oxford plant:

    Two observations:
    1) Both of these plants are relative camera-ready showplaces, and bear little resemblance to many typical North American automotive assembly plants in 2021.
    2) For perspective, notice where these companies fall on this survey:

    [The Hammond episode has the best footage of a modern transfer press in operation (including die change-out) that I’ve ever seen.]

    • 0 avatar

      Speaking of supply chain, pay careful attention to the ‘old’ guy here:

      (The link will put you at an interesting part, but you really should view the whole thing. [You will of course neglect to do this, because you lack attention to detail and you don’t listen very well.])

  • avatar

    Chips don’t lend themselves to “Just in Time” supply chains like having dashboards or interior seats manfacatured right next to the main assembly plant. Chips come from fab plants which are very expensive to build and difficult to modify due to shifts in demand or design. Also, production as migrated away from NA and Europa to Asia (ie: China, Taiwan, & Korea). One of the few areas Japan has lost some of its grip.

    Auto manufactorers lost some of their allocated slots during the initial COVID wave when production wained. Also, vast sways of office workers now sit in corners of their bedrooms and dens working from home sucking up chips for lap tops, plus the migration to cloud computing and the growth of social media. The Perfect Story.

  • avatar

    I realize its still Q1, but how have sales been so far? Given the paint shortages after Fukushima, its entirely plausible there are shortages of key components but my Spidey Sense is thinking it may also be cover to idle plants because of less than stellar sales forecasts.

  • avatar

    There were no such problems when agent 045 was a boss…

  • avatar
    schmitt trigger

    I suspect that you may be right.

    But again, this may be a consequence of modern vehicles being “cell phones with wheels “.

  • avatar

    I long for the days of my 1983 Mercedes diesel, when the only “chips” were in the paint and windshield, and the car ran forever.

  • avatar

    JIT fails again . For certain items it’s great , for other items that are more scarce ( or need to be sourced overseas) it doesn’t make sense.. ( even though means higher investment cost and some more inventory write offs .. )

    In 2014/5 I worked for a mid sized company ( ~$50 million in sales as Supply Chain Mgr and made sure we weren’t running JIT on electronics for the product. Even though that industry had a 6. -8 week lead time for finished product as smaller player we promised 5 years).

    For giggles I called an employee at previous employer last week to see how things were going , and they said “ not too well we are short on electronics so can’t ship many orders in regular lead time “.

  • avatar

    Above should say we promised 5 WEEKS for finished product delivery ( not years ! )

    And current supply chain mgr is big believer in JIT

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