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Semiconductor Shortages to Cost Auto Industry US$210 Billion

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semiconductor shortage
The updated forecast marks a steep increase from its estimate in May of US$110 billion (~CA$140 billion). PHOTO VW

Global consulting firm AlixPartners estimates the ongoing semiconductor shortage will cost the industry globally US$210 billion (~CA$267.2 billion) in lost revenues this year. 

In terms of vehicles, AlixPartners is now forecasting that production of 7.7 million units will be lost in 2021, up from 3.9 million in its May forecast.

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, Global Co-Leader of the Automotive and Industrial Practice at AlixPartners.

“Also, chips are just one of a multitude of extraordinary disruptions the industry is facing—including everything from resin and steel shortages to labour shortages.

“There’s no room for error for automakers and suppliers right now; they need to calculate every alternative and make sure they’re undertaking only the best options.”

Dan Hearsch, a Managing Director in AlixPartners’ Automotive and Industrial Practice, added, “There really are no ‘shock absorbers’ left in the industry right now when it comes to production or obtaining material.

“Virtually any shortage or production interruption in any part of the world affects companies around the globe, and the impacts are now amplified due to all the other shortages.”

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