The semiconductor shortage has caused problems for dozens of industries. But the most-affected industry is arguably automobiles, which have lost out on billions after being forced to cut production of new vehicles.
Why did automakers cut production? With COVID on the rise, many companies expected suppressed demand for months. Unfortunately, the opposite happened — and there was no getting back that production they sold off. Once the pandemic and semi shortage are behind us, the automotive industry will have lost $110 billion, according to one consulting firm. 😬
Today, Toyota announced it would cut its September output by 40%, citing the chip shortage. The company warded off “bad chip mojo” for months, steering clear of the shortage by stockpiling and monitoring suppliers. Unfortunately, there’s not a whole lot of manufacturing you can do without those semiconductor chips. Toyota will suspend manufacturing at 14 plants throughout September.
To make matters worse, Toyota might just be early to the supply cut party. Last week, American automaker Ford said it would “idle” its F-150 pickup plant in Kansas City due to the semi shortage. And this week, BMW AG warned of the “second coming” of the chip shortage. With COVID spreading once again and lockdowns afflicting some regions, who knows when and where automakers will catch a break. 😪
Amidst the shortage, politicians and companies have made moves to mitigate future shortages. The U.S. has asked Taiwan for help in addressing the shortage, partially because some of the world’s biggest chipmakers are located there. During the shortage, Intel tried to acquire a number of semiconductor companies in M&A action. Although Intel came up short in most deals, the company is still a “willing buyer.”