Semiconductor and automakers will meet at the White House on Thursday to discuss efforts to reduce bottlenecks in auto production and address potential pitfalls associated with the spread of the Delta variant of Covid-19.
Expected at the meeting, which comes as forecasts for auto production lost to the increase in the chip shortage, are the Detroit Big Three:General engines (ticker: GM), Ford (F) and Stellantis (STLA). Representatives of Apple (AAPL), Micron (MU), Microsoft (MSFT) and Intel (INTC) were also present.
The Biden administration is seeking information on the various issues surrounding the deficit as part of the government’s efforts to find ways to help.
U.S. Secretary of Commerce Gina Raimondo and National Economic Council Director Brian Deese will de discussions. The administration has already held other talks with chip companies and other matters about the supply shortages.
“We welcome today’s meeting and look forward to a productive discussion on the critical role of semiconductors for the U.S. economy, national security and global technology leadership, as well as the need to strengthen our nation’s chip supply chain,” John Semiconductor Industry Association- CEO John said Neuffer.
Increasing transparency in the supply chain is one of the goals of the meeting. The government is also stepping up an early warning system to help mitigate the impact of factory closures related to the pandemic, The Wall Street Journal reported.
If companies that buy chips order more than is needed for their products, assuming that this will help them get the amount they would actually use, it could cause problems later on. Inflated orders can give chip manufacturers an inaccurate idea of how much to produce, and how to properly allocate those coming out of factories.
Due to the long lead times and complexity of chip manufacturing, it was difficult for industry or government to quickly resolve the issues. Building new factories, the obvious way to increase production, is not a panacea. New factories are expensive, often costing billions, and there is no guarantee that future demand will support such a construction.
The auto industry has been particularly hard hit by the shortage as the number of chips used in cars has steadily increased. Technologies that are now more common, such as assisted driving and hybrid engines, typically use many more chips than older models without advanced features.
The global auto industry could lose $210 billion in revenue this year due to chip shortages and other supply bottlenecks. according to the consultancy AlixPartners. That’s double the losses estimated a few months ago.
According to AlixPartners, automakers will lose 7.7 million vehicles in production this year, compared to the forecast of 3.9 million in May.
Data provider IHS Markit last week cut its production forecasts for the automotive industry by more than 6% for 2021 and 9% for 2022, mainly due to lockdowns in Malaysia. The country produces 13% of the semiconductors used in the global automotive industry.
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