Demand for microchips is high. And there aren’t enough of them to go around. It’s a problem that has plagued the auto industry since the pandemic-induced shutdowns, and it doesn’t seem to be abating.
Automotive News predicts that about 1.68 million and 1.53 million vehicles will be pulled from production schedules in North America and Europe, respectively, in 2022 alone. About 216,000 cars are expected to be lost in China, while the rest of Asia is projected to cut production of 861,400 cars due to shortages of microchips.
Globally, the automotive industry as a whole is expected to lose 4.56 million vehicles.
As we enter 2023, we have both good news and bad news.
Good news? Investments are coming.
In the United States, between January 20, 2020 and August 9, 2022, companies allocated more than $150 billion to microchip production. And his bipartisan CHIPS and Science Act is expected to bring an additional $52 billion in government subsidies to semiconductor research, design, and manufacturing in the United States.
All this is good news for the automotive industry. However, it will be some time before these production lines are up and running. That means the microchip pinch is likely to continue, at least for a while.
“We don’t expect to return to a normal or essential disruption-free type of environment until at least 2023,” said Jeff Schuster, president of LMC Automotive’s Americas Operations and Global Vehicle Forecasts for this year’s said at the Center for Automotive. Research management briefing. “…I think it’s going to be far from normal for a while yet.”