Semiconductor shortage forces automakers to idle some manufacturing facilities
Ford, Audi, Toyota and others have had to halt or reduce production; TSMC calls addressing the shortage a “top priority”
A shortage of semiconductors necessary for vehicle production has forced major automakers around the world to idle production facilities, according to numerous reports. In a recent interview with Bloomberg, American Automotive Policy Council President Matt Blunt said the group has asked federal officials to “help us find a solution to the problem because it will diminish our production and have a negative impact on the U.S. economy until it’s resolved.”
Ford has recently stopped production at plants in Kentucky and Germany due to the semiconductor shortage, CNN Business reported. The company said in a statement that a lack of chips “is presenting challenges and production disruptions—for the global auto industry, including Ford, which could have a significant knock-on effect on jobs and the economy given the importance of auto manufacturing.”
The high-level explanation is that early in the COVID-19 pandemic automakers scaled back semiconductor orders because they were expecting a prolonged sales slump. But sales rebounded more quickly than expected creating the current shortage.
“We are not primarily concerned with where blame may lie for this global shortage, if it lies anywhere, but we just want a solution,” Blunt said. “And the solution is more automobile-sector semiconductors.” He expects an impact through at least the first half of 2021 if not longer. “There are lots of people in the incoming administration that have some automobile experience and expertise, and certainly lots of folks understand, including the president-elect, how important the industry is to the United States.”
In Germany, Ford has stopped operations at a plant in Saarlouis until Feb. 19. “We are closely monitoring the situation and adjusting production schedules to minimize the effect on our employees, suppliers, customers and dealers across Europe,” a spokesperson told CNN Business.
IHS Markit’s Mark Fulthorpe, executive director for the automotive team, said in a research note, “The situation is highly fluid.”
Audi in mid-January reportedly furloughed 10,000 workers. Fiat-Chrysler has stopped production at plant in Mexico. Toyota, Honda and Nissan have also had to stop or adjust production at some of their factories.
TSMC, a key global chipmaker, discussed the automotive chip shortage issue during its Jan. 14 fourth quarter earnings call. VP and CFO Wendell Huang said, according to a transcript, that their customers “continued to decrease their demand in the third quarter,” followed by a “sudden recovery in the fourth quarter….In the near term, as demand from the automotive supply chain is rebounding, the shortage in automotive supply has become more obvious. In TSMC, this is our top priority, and we are working closely with our automotive customers to resolve the capacity support issues.”