Chip shortage hits auto industry hard, $210 billion loss expected in 2021

[zakislam]

In a nutshell: The global semiconductor shortage has delivered an adverse effect on many technology industries, with the auto industry being one of the worst impacted, according to a new report.

Consulting firm AlixPartners expects the chip shortage will cost the worldwide automotive industry $210 billion in 2021 alone. With continuing shortages around the globe, analysts nearly doubled its forecast of $110 billion in lost revenue it initially expected in May.

Accordingly, this will lead to the production of 7.7 million vehicle units being lost in 2021, a significant increase from the predicted 3.9 million units in its May report.

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners.

The pandemic forced automakers to cut back production due to the decreased availability of chips, but it’s not the only disruption to take into account, Wakefield stresses. Shortages are also affecting the resin and steel industries, as well as labor.

Vehicles nowadays come equipped with various electronics for a more complete experience for drivers -- central all-in-one displays and self-driving technology among them, all of which incorporate chips to function. Naturally, “there’s no room for error for automakers and suppliers right now,” Wakefield notes. Firms will need to “calculate every alternative and make sure they’re undertaking only the best options.”

An increase in product prices in several technology industries was inevitable due to the scarcity of supply -- GPUs being one of the worst-hit categories. Shortages are also being compounded by the lack of skilled workers available for chipmakers. However, IDC believes the semiconductor shortage will end by mid-2022, while overproduction could be expected in 2023.

Image credit: Zapp2Photo

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https://www.techspot.com/news/91403-chip-shortage-hits-auto-industry-hard-210-billion.html

 

[Irata]

Weren‘t they (the auto industry) the ones who cancelled their chip orders when Covid started ?

 

[Revolution 11]

Weren‘t they (the auto industry) the ones who cancelled their chip orders when Covid started ?

I wonder what would have happened if one automaker placed excess orders in spring 2020 and auctioned off their wafers to the other car companies.

 

[Irata]

I wonder what would have happened if one automaker placed excess orders in spring 2020 and auctioned off their wafers to the other car companies.

Or alternatively use this to build their market share. But yes, lean manufacturing, cutting the ‚fat‘, no or minimal stock keeping. All this is great when things work perfectly but do bite them in the behind when they don‘t.

 

[ZedRM]

Do away with all of the un-needed and distracting crap and vehicle production will not be effected by chip shortages. We don't need touch-screens and internet in cars. Cars are for driving and transportation, not entertainment.

 

[Irata]

Do away with all of the un-needed and distracting crap and vehicle production will not be effected by chip shortages. We don't need touch-screens and internet in cars. Cars are for driving and transportation, not entertainment.

That‘s what I love about older cars - there‘s a certain purpose and purity to driving them, even if they are luxury models.

Note: This even includes relatively recent (for us older guys) cars.

 

[Mr Majestyk]

Yep, so much tech crap in cars for tech craps sake. Half of it is not needed and is why cars are ever more unreliable and costs are soaring. Meanwhile the engine power, brakes, seats and steering are second rate, but pack it full of high tech shiny baubles and that's all the consumer sheep care about.

 

[trparky]

Yep, so much tech crap in cars for tech craps sake. Half of it is not needed and is why cars are ever more unreliable and costs are soaring. Meanwhile the engine power, brakes, seats and steering are second rate, but pack it full of high tech shiny baubles and that's all the consumer sheep care about.

Exactly. A car is a car, not an entertainment device. My dashboard should not look like the bridge of the starship Enterprise.

 

[godrilla]

Do away with all of the un-needed and distracting crap and vehicle production will not be effected by chip shortages. We don't need touch-screens and internet in cars. Cars are for driving and transportation, not entertainment.

True but what about all the current chips used for tire pressure sensors, back up cameras, gps, back up collision sensors frontal collision sensors, blind spot sensors. There are hundreds of chips crucial for vehicle safety outside of purely luxury though. Even the base models are being cancelled production across the board.

 

[trparky]

True but what about all the current chips used for tire pressure sensors, back up cameras, gps, back up collision sensors frontal collision sensors, blind spot sensors. There are hundreds of chips crucial for vehicle safety outside of purely luxury though. Even the base models are being cancelled production across the board.

People wouldn't need half that crap if they actually paid attention while driving. If you are driving, that is all you should be doing. 200% of your attention should be on the road.

 

[ZedRM]

True but what about all the current chips used for tire pressure sensors, back up cameras, gps, back up collision sensors frontal collision sensors, blind spot sensors. There are hundreds of chips crucial for vehicle safety outside of purely luxury though.

Excellent point! Do we need any of that equipment? Short answer, no we do not.

Even the base models are being cancelled production across the board.

Good. It will force car makers to lean down and redesign. We don't need any of that crap and I honestly don't want any of it on my vehicles.

 

[hwertz]

Agreed. They could try making models without the touch screen stuff in it, I think the car companies are convinced this is a vital feature, while the users (including younger ones) for the most part do everything they THINK the touch screen is being used for on their phones. In reality, they tend to (before they start driving) either tune the radio or start the phone playing music. I suppose the fly in the ointment is the SUVs where rear visibility is so poor a rearview camera is legally mandated, this usually runs through the integrated touchscreen system and it'd look real clunky to have some backup camera screen tacked onto the dashboard like an aftermarket system would use.