The shortage of chips in the automotive industry is far from over

This scene at car dealerships is very common.

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What automakers hoped would be a temporary setback just isn’t happening. According to a Friday Bloomberg report, Japan’s leading semiconductor chip supplier Rohm said it expects chip shortages throughout next year. It’s not that the company can’t manufacture chips fast enough, but that its own supply chains are involved in serious bottlenecks.

Speaking to the publication in an interview, Rohm CEO Isao Matsumoto said its lines continued to operate at 100% capacity as they scrambled to fill backlogs from automotive customers. Ford, Toyota and Honda are three of its biggest customers. However, the executive said the orders were “overwhelming” and that major investments to boost production would not generate quick returns. The company will invest an additional $636 million to further maximize production, but the equipment needed to increase production is not arriving on time. In addition to general supply chain issues for the chipmaker, the delta variant of COVID-19 further complicates matters, he said.

Matsumoto added that customers who offer to pay more to receive their tokens faster are of no use because there just aren’t enough of them anyway. The materials that create the most headaches are leadframes, which create the metallic structure of a chip inside the semiconductor.

Automakers at all levels continue to face the massive consequences of the current shortage. General Motors, Ford, Toyota and others announced additional plant downtime in their production facilities. Toyota, in particular, cut 40% of its global production as he expects tougher times with fewer chips. Meanwhile, auto sales could start to feel a real impact as inventories tighten even more. As dealerships and automakers cash in on profits from customers willing to pay a premium on new vehicles, sales could start to contract with too few new cars to go around.


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