The global semiconductor shortage that has paralyzed automakers for nearly a year shows signs of worsening, as new coronavirus infections halt chip assembly lines in Southeast Asia, forcing more car companies and electronics manufacturers to suspend production.
A wave of delta-variant cases in Malaysia, Vietnam and the Philippines is causing production delays at factories that cut and package semiconductors, creating new bottlenecks on top of those caused by soaring demand for chips.
Underscoring that the problem has defied easy solutions, the White House on Thursday held its second summit in five months with semiconductor manufacturers and buyers, in part to gain more clarity on the scope of the crisis, senior administration officials said.
Attendees included senior executives from Intel, General Motors, Ford, Apple, Microsoft, Samsung and two dozen other companies, as well as Commerce Secretary Gina Raimondo and National Economic Council Director Brian Deese.
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Frustration has mounted on all sides. Automakers want semiconductor companies to crank out more chips for cars. Smartphone companies do not want their semiconductors diverted to automakers. Chip manufacturers say the auto industry shot itself in the foot by canceling semiconductor orders after the covid crisis hit. They are also impatient for Congress to approve $52 billion in federal subsidies to boost domestic semiconductor manufacturing. That measure, supported by the White House, has cleared the Senate but not the House.
The Biden administration, meanwhile, says that while it can play a supporting role, it expects the private sector to take the lead in sorting out the crisis.
"It's on industry to come up with the solutions here and to identify some of the path forward," one of the administration officials said Wednesday.
Also known as computer chips, semiconductors are the brains behind modern electronics. Demand for the components is soaring as more consumer goods become computerized, but supply is scarce because semiconductor factories are expensive and time-consuming to build.
Pat Gelsinger, the chief executive of Intel, the U.S.' largest chipmaker, has said he expects shortages to last into 2023. Others say it could last through the end of that year.
"The chip shortage continues to get worse and at this point we're going to go through 2023," said Ambrose Conroy, founder of Seraph Consulting, which is advising car companies on the crisis.
Automakers, which rely on dozens of chips to build a single vehicle, have been particularly hard hit, forced to halt production lines globally as they await chip supplies. The debacle is likely to cost the auto industry $450 billion in global sales from the start of the crisis through the end of 2022, according to Seraph Consulting.
Even automakers such as Toyota and Hyundai, which planned for potential shortages and initially managed to avoid crippling shutdowns, are starting to encounter problems.
Toyota this month was forced to slash production at 14 factories in Japan over a lack of semiconductors. Some of the cuts will continue into October because of a lack of components from Southeast Asia, Toyota has said.
Ford and General Motors in recent months have been suspending production for weeks at a time at more than a dozen North American factories. As a result, Ford said this month that its U.S. sales declined by 33% in August compared with a year ago.