How a scarcity of chips impacts the automotive business

A semiconductor shortage is hurting the automotive industry, forcing companies to cut production and leaving dealers with less inventory.

Industry analysts estimate the shortage could cost the entire industry $ 110 billion, almost doubling an earlier estimate of $ 60 billion. These include automakers, suppliers and dealers, among others.

In early 2020, automakers were hit by production slowdowns due to Covid-19 pandemic lockdowns and security measures.

Meanwhile, the semiconductor industry has been inundated with the demand for chips from the consumer electronics industry. Home-bound consumers bought new entertainment systems, video game consoles, and other devices to pass the time.

Then the car factories came back to life. But the semiconductors that automakers need for infotainment systems, engine control systems, and countless other functions weren’t there.

The automakers are now trying hard to get the chips they need. The ordeal also forced them to face a fragile semiconductor supply chain that analysts say has been a looming threat for years.

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