Automakers Need Government Help More Than Ever

It wasn't too long ago when top automaker executives, including Ford CEO Jim Farley, predicted thesemiconductor chip crisiswould be resolved in the second half of this year. The reality is very different and potentially far more painful unless steps towards greater domestic production are immediately taken.

Automotive News spoke to some industry analysts about the current situation that began last year when chip suppliers sold their product to electronics manufacturers instead of automakers who were forced to stop production due to pandemic-related lockdowns. With demand greater than ever for trucks and SUVs like theFord F-150andChevrolet Blazer, car companies can't complete vehicle assembly until those crucial chips arrive.

"I have been in this industry for 31 years, and this is a situation I have never experienced before," said Peter Schiefer, president of the automotive division at Infineon Technologies, one of the largest semiconductor makers. "This will not be sorted out in the next few weeks."

The shortage will continue for the rest of the year and could result in a worldwide production loss of 2 to 3 million vehicles. North America alone could lose 719,000 vehicles in 2021. Even if the situation were to improve somehow this summer, it wouldn't last for long because chip makers have deals in place with electronics companies ahead of the holiday season. Black Friday in November is when everyone looks for bargains on electronic devices.

Basically, consumer electronic devices take priority over vehicles because automotive applications consist of just 10 percent of the total global semiconductor market.