Microchips are in great demand. And there aren’t enough of them to go around. It’s a problem that has plagued the auto industry since the pandemic-induced shutdown and it doesn’t seem to be letting up.
Automotive News estimates that, in 2022 alone, North America and Europe will each cut approximately 1.68 million and 1.53 million vehicles from the manufacturing program, respectively. China is expected to lose about 216,000 vehicles due to the microchip shortage, while production cuts of 861,400 vehicles were estimated in the rest of Asia.
Globally, the auto industry is expected to lose 4.56 million vehicles in total.
Entering 2023 is both good news and bad news.
Good News? Investments are coming.
In the US, between January 20, 2020 and August 9, 2022, companies invested more than $150 billion in microchip production. And the bipartisan CHIPS and SCIENCE Act is expected to bring an additional $52 billion in government subsidies for US semiconductor research, design and production.
All this is good news for the auto industry. But it’s going to take a while for those production lines to come into flow. And that means the microchip pinch is likely to continue, at least for a while.
“I don’t think it goes back to a normal or a necessary non-disruption-type environment through at least 2023,” said Jeff Schuster, president of Americas operations and global vehicle forecasting for LMC Automotive. said during this year’s center for. Research Management Briefing Seminar. “… I think it’s going to be far from normal for a while now.”