The fact that global auto production is likely to be cut by nearly 15% in 2021 is a clear indication that the shortage of semiconductor “chips” which appeared in the fall of 2020 is continuing to worsen. The IHS Markit analysis firm posted an estimate Aug. 19 that auto production will be down by more than 7 million vehicles this year, and that production disruptions will continue in 2022.
The most dramatic announcement, by world production leader Toyota Motor Corp. that it will shut down 14 plants in September and cut its production by 40%, was not even included in the IHS Markit analysis. VW’s announcement was: It will be running only one shift this fall at the world’s largest auto production plant, in Wolfsburg, Germany, after extending its summer pause by one week. U.S. auto producers Ford and General Motors have been keeping some of their plants closed or on short shifts for months.
The international chip shortage, based on the fundamental fact that production has become heavily concentrated in a few countries, appeared to be immediately caused by big chip customers reacting to the spring-summer 2020 collapse in industrial demand, by cancelling orders and forcing chip producers to shut down their own production facilities.
