This article is more than 1 year old

Sitting idle while global chips fry: US car industry asks Biden to earmark cash for automotive semiconductors

Forget smartphones – whaddabout motors?

The US automotive industry has warned it faces a bleak six months of disruption caused by the global shortage of semiconductors, adding that the chaos will result in 1.28 million fewer cars made this year.

The gloomy prediction came from the Alliance for Auto Innovation, an umbrella group that consists of big-name carmakers like BMW and Ford, as well as downstream suppliers like HARMAN, Intel, and Texas Instruments. Its members account for 99 per cent of all cars manufactured in the US.

In a written reply to a government-initiated review of the US semiconductor supply chain obtained by Reuters, the alliance urged the Biden administration to dedicate some of the planned $37bn of semiconductor investment to automotive silicon, rather than the small-node chips used in PCs and smartphones.

Subaru Forester

Subaru parks plans to make 58,000 cars due to brakes on silicon supply chain


John Bozzella, the alliance's chief exec, asked for support to create "new capacity that will support the auto industry and mitigate the risks to the automotive supply chain evidenced by the current chip shortage." Funding, he said, should be allocated proportionally based on the needs of the industry.

The automaker sector has found itself acutely affected by the ongoing semiconductor crunch. These ongoing woes, which are forecast to result in an estimated $61bn revenue shortfall, are the by-product of bad luck and poor forward planning.

Japanese auto-maker Subaru announced yesterday that it was making “production adjustments” due to semiconductor supply chain issues - after earlier cutting its production plan for this fiscal year by around 48,000 vehicles due to the chip crisis.

In February, both Nissan and Honda said semiconductor shortages would impact their sales this year.

At the start of the pandemic, the car industry drastically cut back on semiconductor orders in anticipation of plummeting demand from consumers. In reality, demand recovered far faster than expected as consumer confidence returned in the second half of the year.

Carmakers now face an uncomfortable dilemma. In many cases, the production capacity they abandoned have been swallowed up by other silicon-hungry sectors, placing new orders at the back of a queue. Additionally, it takes time to ramp up production, with lead times of up to 26 weeks considered normal. This is thanks to the inherent intricacies of semiconductor manufacturing, as well as the extensive testing and certification required for car chips, which goes above and beyond that for the chips used in smartphones and tablets.

Complicating matters, most automakers rely on just-in-time supply chains, with factories holding a minimal amount of inventory. With limited supplies to lean on, the automotive sector has been forced to cut back on production.

On the production side, things aren't much better. The limited production capacity that exists has been disrupted, and in some cases entirely curtailed due to freak weather events. At the start of the year, NXP and Samsung were forced to suspend production at its Texas factories due to a cold snap that resulted in state-wide blackouts. Another automotive chipmaker, Renesas, suffered a fire at a Japan factory, resulting in production being suspended or shifted to other foundries.

Although new funding for additional semiconductor production is unlikely to arrive in time to solve the current crisis, it could nonetheless help limit the chance of any future supply crunches.

All quiet on the consumer front

Not all semiconductor users have been affected equally, and the consumer and PC sectors have largely weathered the storm, despite shortages of some popular products, like graphics cards and latest-generation games consoles, and a surge in demand from end users.

And the future looks bright, claimed Acer's President for Pan-Asia Pacific Operations, Andrew Hou. Speaking to reporters in Taipei, he said the company expected to see an uptick in its access to components by the second quarter of this year, with the situation improving throughout the year.


Tablets and Chromebooks are hot, towers and desktops are not: El Reg combs through Q3 PC numbers


Acer, the world's fifth-largest PC maker, has largely benefited from the ongoing coronavirus crisis as consumers bought new machines for remote working and learning.

In the 2020 financial year, revenues grew by 18.3 per cent to NT$277.09bn, driven by healthy sales across its gaming, Chromebook, ultraportable (referred to as "thin and light notebooks") and monitor divisions.

Sales of Chromebooks soared by 95.4 per cent as the cheap notebooks became a sought-after commodity for schools and parents. Gaming PCs and ultraportables grew by 30.5 per cent and 62.3 per cent respectively, while the company's monitor division enjoyed a 21.3 per cent uptick. ®

More about


Send us news

Other stories you might like