Chip Scarcity to Value Automakers $110 Billion in Revenues in 2021

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The worldwide semiconductor chip scarcity will value automakers $110 billion in misplaced revenues this yr, up from a previous estimate of $61 billion, consulting agency AlixPartners stated, because it forecast the disaster will hit the manufacturing of three.9 million automobiles.

The chip crunch has pushed residence the necessity for automakers to be “proactive” proper now, and create “supply-chain resiliency” long term to keep away from disruptions sooner or later, the agency stated on Friday.

Automakers have up to now had direct provide agreements with producers of sure uncooked supplies, together with valuable metals akin to palladium and platinum, utilized in exhaust scrubbing techniques.

The extra direct method to securing valuable metallic provides was launched after a provide and value disruption in that market.

Automakers are actually creating direct relationships with semiconductor makers, stated Mark Wakefield, co-leader of AlixPartners’ international automotive observe.

“These items are shocked into existence,” he stated.

Automakers have been reluctant up to now to make long run commitments to purchase semiconductors or different uncooked supplies and tackle the monetary liabilities for such agreements, Wakefield stated.

Now, “the chance is actual. It is not a possible” danger of shedding manufacturing to semiconductor shortages, he added.

Individually, Ford Motor Co stated on Thursday it’s redesigning automotive elements to make use of extra accessible chips, in response to the worldwide semiconductor scarcity.

© Thomson Reuters 2021

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