The White House said Thursday that administration officials are working to address the growing shortage of semiconductor chips that has slowed down auto production around the world.

White House press secretary Jen Psaki said the Biden administration is "currently identifying potential chokepoints in the supply chain and actively working alongside key stakeholders in industry and with our trading partners to do more now."

 

This is one reason Biden plans to sign an executive order in the coming weeks to conduct a comprehensive review of supply chain issues for critical goods.

On Wednesday, General Motors Co. said the global semiconductor chip shortage could shave up to $2 billion from profit in 2021. On Tuesday, the largest U.S. automaker extended production cuts to three North American plants and said that it would partially build and later finish assembling vehicles in two other factories due to chip shortages.

Ford Motor Co. has previously said that it has lost production of its top-selling F-150 pickup truck. In the United States and around the world, and several other automakers have cut production.

The official added it is critical "to identify more durable solutions to addressing the longstanding issues faced by the semiconductor industry and the end users of these goods."

In a Jan 19 letter to Biden adviser Brian Deese, the United Auto Workers union and the heads of associations representing automakers, auto dealers and parts manufacturers asked the Biden administration to consider "urging major silicon wafer foundries to ramp up production of automotive grade wafers."

 

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A increasing global shortage of semiconductors for auto parts is forcing major car companies to stop or delay the production of vehicles just as they were recovering from factory shutdowns due to pandemics.

Officials at Volkswagen, Ford, Fiat Chrysler, Toyota and Nissan all say they have been hit by shortages and forced to postpone the production of some models in order to keep other factories going.

Industry officials say that semiconductor companies diverted production to consumer electronics during the worst of COVID-19 sales slowdown last spring. Global automakers have been forced to close plants to prevent the spread of the virus. There wasn't enough chips when automakers recovered.

The industry needs six to nine months of lead time to get chips through a complex supplier network.

When overseas factories producing the chips were forced to shut down in the early phases of the pandemic, the problems began. After the Trump administration placed sanctions on 11 Chinese firms for alleged labor violations, the issue was worsened last July.

At a factory in San Antonio, Texas, Toyota was forced to delay production of the full-size Tundra pickup. Next week, Ford had planned down time at its assembly plant in Louisville, Kentucky, but pushed it forward to this week. 

Fiat Chrysler briefly shut down factories in Brampton, Ontario, and a small-scale SUV factory in Toluca, Mexico, while Volkswagen said it faced production slowdowns due to the shortage in December. Nissan said it had to shift production in Japan, but in the U.S. it has not seen a big effect so far.

Automotive manufacturers have also stopped manufacturing slower-selling cars to switch the chips to targeted market regions.

Fiat said "This will minimize the impact of the current semiconductor shortage while ensuring we maintain production at our other North American plants.”

New vehicles that have electronic features such as Bluetooth communication and driver assistance, navigational systems and electric power systems, the automotive industry uses more semiconductors than ever before. Semiconductors usually are silicon chips that perform memory and control functions for items from computers and mobile devices to cars and microwave furnaces.

According to Mordor Intelligence, the global demand for semiconductors is projected to hit approximately USD 129 billion in 2025, almost three times its size in 2019.

The scarcity of chips needed in increasingly automated cars is the latest example of how the ebbs and flows of the semiconductor industry can have product ripple effects.

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In the midst of a global shortage of auto chips, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) is 'streamlining' auto-related products through its wafer fabs and reallocating wafer power, the company said on Thursday. 

 


 

Automakers around the world are closing assembly lines due to shortages, which in some cases have been intensified by the actions of the former U.S. administration against Chinese chip factories.

On Wednesday, Taiwan's economic minister said major Taiwanese chipmakers were prepared to prioritize supplies for automakers after meeting senior company managers, including TSMC.

In a statement, TSMC said it was discussing the "challenges" of chip supply as its top priority, "The automotive supply chain is long and complex and we have worked with our automotive customers and identified their critical needs".

"TSMC is currently expediting these critical automotive products through our wafer fabs. While our capacity is fully utilised with demand from every sector, TSMC is reallocating our wafer capacity to support the worldwide automotive industry."

Auto chips accounted for just 3% of TSMC's revenue in 2020, 48% for sluggish smartphones, and 33% for high-performance chips. 

In the fourth quarter, TSMC auto chip sales jumped 27% from the previous quarter but still accounted for just 3% of total sales.

With German Economy Minister Peter Altmaier writing to his Taiwanese counterpart Wang Mei-hua to ask her for support in handling it, the problem has become a diplomatic one.

Volkswagen, Ford Motor Co, Subaru Corp, Toyota Motor Corp, Nissan Motor Co Ltd, Fiat Chrysler Automobiles, and other carmakers have been impacted by the shortage.


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