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Chip shortage continues as automakers adapt to supply chain woes

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The average amount of time that automakers and other companies need to wait for chip orders reached 21.7 weeks; this wait time has only been increasing for the last nine months. The pandemic triggered global chip shortages that will cost $210 billion in lost sales this year losing 39 million vehicles in the process. 

Although the shortage’s severity is hitting automakers unevenly depending on where plants are located, companies across the industry are looking to shift their supply chain for the foreseeable future: 

While this shortage has opened conversations around new technologies and pushed the industry’s transition into the electric vehicle industry, the shortage is extending far beyond chips: rubber, electrical parts and labor are all running scarce and the shortage is transforming into a structural upheaval for the automotive supply chain that could last several years. 

One major way that the auto industry is evolving in response to the shortage is the surge in used-car prices. According to a report by Manheim, used-car prices have been a major contributor to U.S. inflation this year holding roughly a 2% weighting in the overall consumer price index. The report also predicts that the Used Vehicle Value Index will climb to 30% compared to the previous year. 

In addition, some manufacturers are even taking steps backward and are ordering microcontroller chips again. Microcontrollers are older chips that have been used to electronically control engines, airbags and other vehicle functions in the past decades. In fact, key microcontroller suppliers like Texas Instruments and Microchip Technology reported their highest lead times on record this month. 

As 2021 comes to a close with no relief of the shortage in sight, it will be interesting to see how manufacturers continue to adapt to the gap in the supply chain and look to tech companies for solutions. Get a better understanding of the complexities of the global chip shortage with this Bloomberg infographic.

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Jasmine Kim
Jasmine KimB2B Content Manager

Jasmine is The Zebra’s newsroom content writer. With a background in journalism, she reports on breaking news, trends, mergers and acquisitions, and financial reports related to the insurance industry.