The worldwide semiconductor shortage continues to affect the automotive industry. One by one, automakers have warned that the silicon chip shortage will negatively impact production output and revenues in the coming months.
Renault identified the chip shortage as a major problem when reporting its Q1 results in April. A week later, Ford said it expects to lose half of its Q2 production, up from 17 percent in Q1. And on Wednesday, Stellantis Chief Financial Officer Richard Palmer added to the chorus, warning that “it would be imprudent to assume that the issue is just going to go away.”
The shortage has its roots in the pandemic as carmakers canceled pending semiconductor orders in the face of heavily reduced demand for new vehicles. Since then, a drought in Taiwan and a fire at a Japanese chipmaker have compounded the problem, as has strong demand for consumer electronics.
Unfortunately for the auto industry, the chips it requires are made using older processes than the industry’s leading edge, and there is little spare capacity to meet its demand.
Both Intel and Taiwan Semiconductor Manufacturing Company have said that they could not increase capacity before 2023.
Some automakers and members of Congress have called on President Joe Biden to invoke the Defense Production Act in order to help the auto industry. Both the current and previous administrations have invoked the DPA in response to the global pandemic. But President Donald Trump also used it in 2017 to harden space infrastructure and considered doing the same to keep coal-fired power plants open.
The White House may be unwilling to use the DPA in this case. Reuters quotes an unnamed “senior administration official” as saying that “the short-term outlook is challenging” with regard to using the DPA and that prioritizing automakers would mean “fewer chips for others.”
Meanwhile, the US Department of Commerce has been pleading the automakers’ case to TSMC and other Taiwanese chipmakers. “There’s not a day goes by that we don’t push on that,” Commerce Secretary Gina Raimondo said on Tuesday.