chip

Big Automotive Chip Shortage Is No Surprise

A chip shortage forced Volkswagen to stop production of some bestselling brands; a VW line in Germany last month.



Photo:

Matthias Rietschel/dpa/ZUMA PRESS

“Car Makers Collide With Global Chip Shortage” (Page One, Feb. 13) correctly identifies the auto industry’s current supply-chain woes as a self-inflicted wound. From the electronics-manufacturing industry’s point of view, automotive is mostly a low-volume, high-mix customer segment, and it requires buffering through component distributors. Instead, the auto makers’ extreme focus on cost optimization and lean manufacturing meant eliminating these valuable supply-chain partners. The focus on lean should have been balanced with a pragmatic view on the extreme cost of idled automotive production lines. To shut down production lines for $80,000 vehicles because of a missing $2 microcontroller is catastrophic.

Products like semiconductors that have longer lead times and large production lot sizes need distribution for efficient buffering between the manufacturers

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Foxconn chairman says expects ‘limited impact’ from chip shortage on clients

TAIPEI – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients will face only “limited impact” from a chip shortage that has rattled the global automotive and semiconductor industries.

“Since most of the customers we serve are large customers, they all have proper precautionary planning,” said Liu Young-way, chairman of the manufacturing conglomerate formally known as Hon Hai Precision Industry Co Ltd

“Therefore, the impact on these large customers is there, but limited,” he told reporters.

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Liu said he expected the company to do well in the first half of 2021, “especially as the pandemic is easing and demand is still being sustained.”

The global spread of COVID-19

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Car models most likely to be impacted by chip shortage

  • Car dealerships are already reflecting the slowdown in manufacturing due to the global chip shortage.
  • Shoppers may see higher prices and lower availability of certain car models.
  • Car companies began halting production in January and expect to lose billions this year.
  • Visit the Business section of Insider for more stories.

A global shortage of computer chips has caused shutdowns at several automotive manufacturing plants — and car dealerships are already reflecting the shortage.

Car shoppers can expect to see an impact in the availability of certain car models due to the chip shortage, as well as a price increase, according to Cars.com executive editor Joe Wiesenfelder. Dealerships may also be less likely to offer deals as supplies dwindle.

“Consumers in the market of considering buying a car should shop now because choices and prices could worsen over the next two quarters,” Wiesenfelder told Insider. 

Car companies began halting production

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How Car Makers Collided With a Global Chip Shortage

Executives at auto makers like Volkswagen AG and General Motors Co. were upbeat about the industry’s recovery in early fall. Demand was rebounding from pandemic lows, and their factories were humming again.

Then came the warnings. Like the one in a Nov. 12 Skype call between VW’s logistics head and officials at car-parts supplier Continental AG . The supplier said it wouldn’t deliver a range of core components VW needed because of a global semiconductor shortage, said people familiar with the call.

Other car makers were getting similar alerts from suppliers.

In December, the parts flow from Continental, Robert Bosch GmbH and other suppliers had so dried up that VW announced it would stop production of bestselling brands such as Audi and its namesake VW brand at plants in Europe, China and North America. Audi, citing a chip shortage, furloughed 10,000 factory workers for the first time since

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