The shortage in the availability of chips
could lead to a prolonged pause in production in the auto industry
Global car manufacturers are either
slamming brakes on the production or closing down assembly lines in recent
weeks due to the lack of availability of semiconductors. One of the key reasons
being Donald Trump’s strict actions against Chinese chip manufacturing plants.
Following the outbreak of the health crisis affecting economies, the automotive
industry struggled a lot to get back to a stage of recovery.
In recent months, the growth has been
rather steady and the semiconductor producers are struggling to meet the
demand. This could lead to temporary stoppage of car production for months as
auto giants such as Ford, Toyota and Subaru are lessening the roll outs in the
United States while Volkswagen, Fiat Chrysler Automobiles and Nissan are also
affected elsewhere.
The chip industry was running wild due to
increased consumption of personal electronic goods such as gaming consoles and
computers last year. Moreover, the demand in the volumes sales of passenger
vehicles has also grown and thus the chip makers have their work cut out. In
the United States, President Donald Trump’s move of reducing technology transfers
to China, makes the scenario even worse.
The automakers are also looking at ways
to move to different chip suppliers from other Asian countries in an aim to
meet the shortage. Modern automobiles rely much on electronics and therefore
lack of a small chip could curtail production. Ford’s Kentucky plant could not
roll out models like the Escape SUV due to the unavailability of a chip used in
the braking system.
The Blue Oval is also pausing production
for a month at its Germany factory where the popular Focus is made. Since the
chips born out of silicon wafer, the processing would consume at least three
months for the final product to come out and it could only exacerbate the
situation. In addition, the producers cannot expand their facilities in a
whisker as it takes billions of investment.
On an average, it takes up to 12 months
for testing tools and other complexities involved to be established. The impact
could also be seen in our domestic market as Ford India’s factory in Maraimalai
Nagar near Chennai is subjected to an extended closure for a week due to the
disruption in supply chain for a critical component.
Source:
gaadiwaadi.com