Ford Motor Co. is idling thousands of new vehicles in their assembly plants because a global shortage of semiconductors is hampering production.
The chip deficit, which began in December, means Ford could miss out on $ 1 billion to $ 2.5 billion in sales, the Michigan automaker warned this week. Ford said its Edge sport utility vehicle and F-150 pickup trucks will sit at its Louisville, Kentucky facility for weeks waiting for more chips. Until these vehicles can be fully assembled, Ford is cutting off the shift at the Kentucky plant.
Ford said in a statement Thursday it will hold up newly built Rims and F-150s before “vehicles are shipped to dealerships once the modules are available and extensive quality checks are completed”.
Theis the main reason for the chip shortage, according to the Semiconductor Industry Association. Electronic device sales have increased because many people worked from home, signed up for telemedicine visits, and attended distance learning from their laptops. The country’s limited supply of semiconductors went largely at the expense of automobiles to these devices, according to the trading group.
Last month’s massive winter storm in the Midwest as well as the southern and central states forced Samsung and NXP Semiconductors to temporarily suspend chip production at their Texas plants.
A semiconductor is a computer chip that acts as the brain for an electronic device. It covers complex thinking such as computing and data storage that is essential for cell phones, tablets, kitchen appliances, laptops, video game consoles, and automobiles. Dozens of individual semiconductors are used in vehicles to control everything from engine temperature to warning drivers of the need to change the oil.
The White House has weighed the chip shortage and its impact on the auto industry. President Joe Biden said last month that he would send $ 37 billion in federal aid to semiconductor companies so they can ramp up production. Asian nations, including China and Taiwan, produce most of the chips used in American cars and appliances.
Ford is just one of many automakers affected by the semiconductor shortage. A Toyota spokesman told Bloomberg News that production of the Toyota Tundra pickup in Texas will decrease by 40% due to the shortage. General Motors has ceased production at assembly plants in Kansas, Canada and Mexico, while other vehicles in Missouri are still being built and left in part.
The chip shortage means that 1 million fewer cars will be produced worldwide this year, Stephen Foreman, an economist at Oxford Economics, predicted in a research note. Automakers shouldn’t feel the financial blow from fewer chips until the first quarter of 2021.
“So the impact is likely to be temporary and allow automakers to ramp up production from the second half of 2021 to make up for the lost ground,” Foreman said.
– With reports from CBS News transportation correspondent Errol Barnett