Title: A Microchip Might Be Why the New Car You Want Is Hard to Locate
Headings: A Microchip Might Be Why the New Car You Want Is Hard to Locate
A Microchip Might Be Why the New Car You Want Is Hard to Locate
Pandemic Pressure
Ford, FCA, Toyota, Subaru, VW Having to Adjust
Kinks in the Supply Chain

Content: At the same time, the demand for consumer electronics—notably the PlayStation 5 and Xbox Series X, as well as laptops and desktops for working from home—skyrocketed. Microchip suppliers adjusted production accordingly, and now that car demand has recovered much more quickly than expected, suppliers haven't been ready to respond. "With lead times of six to nine months, the semiconductor industry has not been able to scale up fast enough to meet this unexpected growth in automotive demand," auto supplier Continental told Car and Driver in a statement. " The bottlenecks from the semiconductor industry are expected to continue well into 2021, causing major disruptions in Continental's production." Comezora via Getty
Additionally, several moves by the Trump administration in the U.S.-China trade war resulted in fewer semiconductors coming into the marketplace, ultimately exacerbating the low supply, Gupta said. And then, lastly, the older microchips that the auto industry relies on—commonly referred to as eight-inch wafers—can't be produced quickly enough by automotive chip manufacturers such as NXP Semiconductors and Infineon due to manufacturing limitations. Through the second half of last year, new-vehicle inventories were much lower than the industry prefers, and although inventories have made a recovery, they are still lower than where they were at this time last year. Automakers are attempting to taper back production of vehicles that have higher inventories. Still, to take one example, there is a less than 30-day supply of the Toyota Tundra, which has had production cut back, according to Cox Automotive. Similar to the supply challenges the automotive industry faced in the second quarter of 2020, the full impact of this semiconductor shortage likely won’t be completely understood until it’s behind us.