A chip shortage that has disrupted vehicle production in other parts of the globe is reaching U.S. shores, stifling output for major car companies and dimming prospects for a smooth recovery from the pandemic. Ford Motor Co. is planning to idle a Louisville, Ky., factory for a week starting Monday, because of parts shortages stemming from limited supplies of semiconductors now vital to everything from display screens to transmissions. The move will lead to the temporary layoffs of about 3,900 workers at the plant, which builds two popular SUVs, the Ford Escape and Lincoln Corsair.
Honda Motor Co. , Fiat Chrysler Automobiles NV and others are also wrestling with the shortage, leading them to reduce output on everything from big pickup trucks to compact sedans.
‘One of our clients is calling it ‘chipageddon.’’
As manufacturers globally try to recoup production lost last spring because of the pandemic, many have been hit with sporadic parts shortages, shipping bottlenecks and other challenges related to the health crisis, such as high absenteeism.
Now, they are also dealing with chip shortages. The problem was first observed at Chinese factories late last year and is spreading to the rest of the world, as demand for electronics has surged during the health crisis, particularly with many people still spending most of their time at home. The global chip industry has struggled to meet demand.
Auto executives, lawyers and analysts said they were startled at how quickly the shortages cut into U.S. production, with several companies moving to revise production forecasts downward in the first working week of the new year.
“It’s incredible how quickly this just blew up,” said Jeff Schuster, president of global forecasting at industry firm LMC Automotive.
The auto industry has emerged as a major consumer of computer chips in recent years, rivaling the personal-electronics sector. Demand is increasing as more car companies update the tech in their vehicles, decking them out with big, tabletlike displays and other features that consume more computing power than was needed in the past.
Additionally, the industry’s pivot to electrified vehicles is putting greater emphasis on the need for more software-based systems, analysts said.
Most of today’s cars have at least 40 different chips, with higher-end models having up to 150, said Sam Abuelsamid, an analyst at Guidehouse Insights.
“If even one has a production disruption, you can’t ship the car,” he said.