White House Wades In As Chip Crisis Poised to Cost Auto Industry $210 Billion

The White House is discussing the ongoing semiconductor crisis with companies as the auto industry is poised to lose $210 billion in revenue....
White House Wades In As Chip Crisis Poised to Cost Auto Industry $210 Billion
Written by Matt Milano
  • The White House is discussing the ongoing semiconductor crisis with companies as the auto industry is poised to lose $210 billion in revenue.

    The semiconductor crisis has taken a major toll on the auto industry, with manufacturers around the world being impacted. For example, GM recently announced it would shut down most of its American plants as a result of the shortage, and had previously said it would ship some 2021 trucks without their full complement of chips, leading to 1 MPG less than previous models.

    Companies are taking various measures to ease the shortage. Intel has said it will start producing chips for the auto industry, but warned it would take months before its first chips were produced.

    In the meantime, a report from AlixPartners is warning the crisis will cost auto makers $210 billion in revenue in 2021, exacerbated by a COVID-19 outbreak in Malaysia, a main hub for automotive semiconductor manufacturing.

    “Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners. “Also, chips are just one of a multitude of extraordinary disruptions the industry is facing—including everything from resin and steel shortages to labor shortages. There’s no room for error for automakers and suppliers right now; they need to calculate every alternative and make sure they’re undertaking only the best options.”

    At the same time, the White House is engaging with companies in an effort to determine what measures can be taken to ease the crisis. According to TheStreet, executives from Apple, Ford, General Motors, Intel, Microsoft and Samsung were expected to attend a meeting at the White House Thursday to discuss the issues.

    Unfortunately, in the short term, there appears to be no quick fixes or easy answers to the problem.

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