Chip Shortage Expands, GM Forced to Idle Factories

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]