The Microchip Shortage Is About To Get Even Worse

Industry News / 6 Comments

A fire at a Japanese chipmaker threatens already short supply.

The global microchip shortage rages on. This week we found out that nearly 31,000 Honda and Acura vehicles were taken out of production. The Honda Accord line was hit the hardest, losing 5,000 units. The Civic loses 4,000, and the strong-selling CR-V loses 4,400. These numbers are from AutoForecast Solutions.

The shortage has been going on since at least January when Ford, Dodge, and Toyota were all forced to idle some of their North American plants. Ford, for example, shut down its plant in Kentucky, home of the popular Expedition and Escape, and Lincoln Corsair and Navigator.


General Motors said it will build some 2021 full-size trucks without a fuel management module, which will affect the fuel economy by one mpg. Now, Ford is resorting to similar desperate measures to keep production of the popular F-150 truck and Edge SUV chugging along.

As for the why, the supply chain problem started after automakers underestimated the rebound in demand amid the coronavirus pandemic. Not only did we start buying "stuff" faster, most of it was electronic. The wafer foundries making the chips were fully booked and couldn't ramp up production fast enough, according to the South China Morning Post.

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The demand for these microchips isn't just coming from the auto industry with its infotainment systems, Bluetooth connections, and driver-assist systems. They're also used smartphones, which turn over yearly, laptops, gaming consoles, and about a million other things. After the pandemic, demand outweighs supply.

With chipmaker consolidation, there's a lack of second sourcing. That just means having two suppliers for the same chip, in case something like this happens. In the early '80s, IBM told Intel it would use its processors in IBMs new personal desktop computers, but not before there was a second source. Intel then licensed AMD as a backup.

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Across the globe, we've now lost out on 1.1 million vehicles, which is up from 933,000 a week before. Europe is now the most-impacted region, taking over for North America. AFS expects a total of almost 2 million vehicles affected before the shortage is over.

UPDATE: A fire at the Renesas Electronics chip plant on Friday threatens to further shrink the supply of microprocessors. The company says it will take at least a month to resume production at a wafer line. An electrical fault caused a fire and poured smoke into its cleanroom. Renesas has about a 30% share of the global market for microcontroller chips used in cars. One brand that isn't worried yet is Toyota, which has a stockpile of the chips.

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Source Credits: Automotive News

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