Automakers cutting production due to semiconductor chip shortage

Automakers cutting production due to semiconductor chip shortage

The automobile industry is grappling with an issue that is costing them billions in losses. Almost everything is run by semiconductor chips and the entire world is running short of it. Multiple automakers have had to decrease their production or halt it completely.

One of the most famous names to be hit with the semiconductor shortage is Toyota. The global giant is planning to cut its worldwide production by 40%. Instead of the planned 900,000 cars, Toyota will only make 450,000 in September.

Many other marques, including General Motors, Ford, Daimler, Nissan, BMW, Geely, and Renault have already decided to tie down their production lines to some extent. German giants Volkswagen is also foreseeing a slowdown in production in the coming months. They are expecting a “volatile and tight” supply of semiconductor chips in the third quarter.

Vehicles of the present-day house a flurry of electronic systems underneath its mechanical skin. All these systems need complex semiconductor chips to carry out their tasks. A worldwide semiconductor chip shortage can hamper the production and delivery of these vehicles.

Semiconductor Chip Shortage

Cars are not the only products that are struggling with the chip shortage. More and more devices turn “intelligent” in our present age and all of them need multiple semiconductor chips to sustain their “smart” operations.  So this ongoing semiconductor chip shortage can affect the supply of almost all the smart devices in the market. This can range from a random smart light bulb to massive trucks.

Like almost everything wrong in this world right now, Covid has to be partly blamed for this shortage as well. A boom in the sales of computers and smart devices during the lockdown months initiated the shortage. A surprisingly quick comeback of the automobile market after a large dip added more woes.

According to a research note by Bank of America, the shortage will partially reduce in late-2021 while some complex chips will not available in bounty until 2022. So, consumers are looking at longer waiting periods for their preferred car models.

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