The semiconductor chip shortage has caused a number of automakers to cut production or temporarily idle plants, and the delays are starting to add up.
According to the latest forecast from AlixPartners, the chip crisis will result in 3.9 million less vehicles being produced this year. That’s a massive number and the firm said it will cost automakers approximately $110 (£78 / €90) billion in revenue. This is nearly double their earlier estimate of $61 (£43 / €50) billion in January.
AlixPartners’ Dan Hearsch noted the typical vehicle uses up to 1,400 chips and that number will only increase in the future as the “industry continues its march toward electric vehicles, ever-more connected vehicles and, eventually, autonomous vehicles.”
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Unfortunately, things are expected to get worse before they get better. In particular, the company told CNBC the biggest impact on automotive production will likely occur in the second quarter. That being said, Hearsch expects the situation will gradually improve and, by the third quarter, there could be enough chips to “get everybody back up and running for the most part.” However, things might not return to normal until next year.
Help could be on the way as Reuters is reporting that several U.S. Senators are preparing to unveil a $52 (£36 / €42) billion proposal to significantly increase chip production in America. While the situation wouldn’t improve overnight, the U.S. only builds 12% of the world’s supply of semiconductor chips and that’s a steep drop from the 37% share the country had in 1990.
