Ford Has A Plan To Deal With Global Chip Shortage

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But it's still going to be a tough second quarter.

The ongoing global semiconductor chip shortage continues to cause trouble for Ford. Last month, it was reported that production of the Ford Mustang would be halted and later this month, production of the Bronco will also be impacted. At this point, a creative solution to what is clearly going to be an extended issue wouldn't hurt. That's exactly what Ford has conjured up. The company has said that it will start redesigning some components to make them more compatible with more widely available chips. It's one of several strategies announced by CEO Jim Farley this week.

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Ford will also consider dealing directly with the foundries that make the wafers used for the semiconductors. This would go against the convention of automakers dealing with suppliers rather than the makers of the chips directly. "Not only are we redesigning a lot of our components to work with chips that are more accessible… but we think we need to look at buffer stocks, actual direct contracts with some of the foundries," said Farley.

He noted approximately 60% of the chips used in Ford cars were 55-nanometer in size or larger. These are the chips that are in short supply.

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Already, Ford has had to halt the production of its critically important F-150 truck. The automaker said that the ongoing shortage will halve its rate of production this quarter and result in a cost of $2.5 million this year. Ford is not alone, though, as Volkswagen said last week that it was in "crisis mode". In the first quarter of this year, VW had to cut production by 100,000 cars due to the chip shortage. Like Ford, VW has also initiated direct talks with chip manufacturers.

Among big brands, it seems that Toyota is one of the few not to be seriously impacted by the crisis thanks to a stockpile of chips that should allow it to get through this period relatively unscathed.

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Source Credits: Reuters

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