US Automotive Group Warns of Chip Shortage, Calls for Government Help | Automotive Industry News

The group wants the US government to allocate funds to chipmakers to expand production to cater for the auto industry.

U.S. auto industry group seeks government help as it warns global semiconductor shortage could result in 1.28 million fewer vehicles being built this year and halt production for another six month.

The U.S. Department of Commerce is expected to devote some of the funding to a bill to expand U.S. semiconductor production to meet the needs of the automotive industry, the Alliance for Auto Innovation said in written responses to a review initiated by the government.

US President Joe Biden in February ordered several federal agency actions to deal with the chip crisis and is also seeking $ 37 billion in funding for legislation to supercharge chip manufacturing in the United States.

Some funds are expected to be used to build new capacity that will support the auto industry and mitigate the risks to the auto supply chain highlighted by the current chip shortage, wrote group chief executive John Bozzella.

The group said the U.S. government could specify that a particular percentage, reasonably based on the anticipated needs of the auto industry, would be allocated to facilities that will support the production of auto-grade chips in one way or another. .

The group represents almost all of the major automakers with factories in the United States, including General Motors Co, Ford Motor Co, Volkswagen AG, Toyota Motor Corp, and Hyundai Motor Co.

Smartphones vs cars

Automakers have been hit particularly hard by the global chip shortage after many orders canceled when auto factories were idle during the coronavirus pandemic.

When they were ready to restart production, they found that chipmakers were busy fulfilling orders from the consumer electronics industry, which saw the demand for high-end devices for the job. and hobbies explode as people spent more time at home.

Most automakers have been hit by the shortage. In recent announcements, Ford said last week it would cut production at seven North American assembly plants, while Kia Motors said it was cutting two days of production in Georgia.

The shortages come at a time when auto sales in the United States jumped more than 8% in the first quarter, analysts estimate. The gain reflects the purchase as vaccination rates rise and more people return to their pre-pandemic routines. Increased confidence in the economy and concerns about the declining supply of cars due to the shortage of computer chips also helped boost shipments.

Major automakers have met or easily beat a consensus forecast from analysts, most of whom were forecasting quarterly gains due to the dismal performance of the first quarter of last year.

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