Ford, BMW, Honda cut production due to global chip crisis

There are very strong indications that, the production crisis sparked by a global shortage in semiconductors is getting worse despite the best efforts of chip makers as demand has outsripped supply in the wake of a pandemic-induced buying spree that saw the public snap up everything from gaming consoles to TVs during lockdowns.

As a result, many of the tech products that rely on these chips like the PS5, Xbox Series X/S and the iPhone 12 have quickly sold out, suffered delays or been prone to extended shipping times. Now, the situation is deteriorating for one of the worst hit sectors and that is the automotive. Bloomberg reports that carmakers across three continents are currently warning of production cuts.

In the span of 12 hours, Ford in US said chip shortage could halve production in the current financial quarter; Japan’s Honda announced it will halt production at three domestic plants for five to six days next month; and BMW warned of delays at its facilities in Germany and England.

What started as a blip caused by factory shutdowns during the pandemic, has morphed into widespread disruption on the back of high demand for chips across other industries. Vehicles use semiconductors to power their advanced driver assistance systems, including anti-lock braking and parking assist. The more tech is squeezed into cars, the more chips they will inevitably require.

The crisis has also translated into longer waiting times for car buyers. According to The New York Times, Porsche has reportedly warned dealers in the US that customers might have to wait an extra 12 weeks to get their cars.

The news is hardly better for the tech industry. Coming off mammoth financial results, both Apple and Samsung have admitted the chip shortage will cause a significant impact in the near-term. Despite their push to make more in-house processors, the announcements underline Apple and Samsung’s reliance on a vast procurement network.

Mitchell Chisom