Yes, the Chip Shortage Is Still Kneecapping Global Car Production
Several automakers will reportedly idle plants and reduce production next month.
A tiny piece of silicon continues to affect the global supply chain, and Nissan and Mitsubishi are among the latest crop of automakers to report delays and shutdowns. Today, Autoblog reported that Nissan will idle its factory in Kyushu, Japan on June 24, 25 and 28 to make adjustments. Suzuki and Mitsubishi will be reducing production and halting assembly lines as well.
"A global shortage of semiconductors has affected parts procurement in the auto sector. Due to the shortage, Nissan is adjusting production and taking necessary actions to ensure recovery," a Nissan spokeswoman said via Autoblog.
The impact of the semiconductor chip shortage on the automotive market has been vast, resulting in competition between carmakers and electronics manufacturers. Just one of these chips is incredibly small–five-hundredths of the size of a human hair–and is extremely complicated to build. Making semiconductors requires a clean room devoid of any dust, because even one speck can damage the electronics, flushing time and money down the drain. You might think a surgery suite is clean (and it is) but a semiconductor clean room is next-level uncontaminated.
“Manufacturing a chip typically takes more than three months and involves giant factories, dust-free rooms, multi-million-dollar machines, molten tin and lasers,” Ian King, Adrian Leung, and Demetrios Pogkas reported on Bloomberg.com on May 5. “The end goal is to transform wafers of silicon—an element extracted from plain sand—into a network of billions of tiny switches called transistors that form the basis of the circuitry that will eventually give a phone, computer, car, washing machine or satellite crucial capabilities.”
Last month, Reuters reported that the current U.S. administration proposed $50 billion to support chip manufacturing and research as part of a $2 trillion infrastructure proposal. More than 80 percent of global chip production is based in Asia; the U.S. produces about 12 percent and "chip independence" is a goal.
CNBC's Jim Cramer predicts the chip shortage will right itself this quarter, and that remains to be seen. Last year’s pandemic shutdown affected production for manufacturers around the globe, putting everyone behind. Like a horrible layer cake, rumblings of a chip shortage started picking up in December of last year, and it has been a snowballing issue. No one knows yet when the problem will be remedied, but the show has to go on and automakers are holding up a massive responsibility to keep production going. A lot of money is at stake, but even more importantly, millions of jobs.
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