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The Great Automotive Chip Shortage

The shortage drags on, with lock downs and travel restrictions prompting consumers to snap up smart phones, game consoles, smart TVs, computers and laptops to get online. Lower down in importance to chip makers are automotive chips. Auto manufacturers are not getting enough chips to fuel a fledgling recovery in their own industry.

Automakers are expected to lose billions of dollars in earnings this year due to a shortage of highly important semiconductor chips. Research firm IHS Markit anticipates 672,000 fewer vehicles will be produced in the first quarter of 2021 due to the semiconductor shortage, including 250,000 units in the world’s largest vehicle market, China.

It’s no secret that component shortages have become a recurring challenge for the component industry from capacitors in 2018 to SMD capacitors and MLCCs in 2020. Now Automotive ICs have become the latest components to find themselves in short supply and high demand.

So the chip shortage casts a pall on the industry, exposing structural problems for car makers as semiconductors become more integral. Chip makers and auto manufacturers largely don’t expect the situation to normalize until at least the second half of the year. Some industry officials and analysts expect chip shortages could remain a problem into next year.