The Chip Shortage is Getting Worse
Burc Oran
September 24, 2021
The Chip Shortage is Getting Worse

As part of the government’s effort to figure out how to help, the Biden administration is collecting data regarding problems affecting the chip shortage.

Semiconductor and auto manufacturers will meet with President Biden at the White House on Thursday to discuss strategies for reducing automobile production bottlenecks and to deal with potential problems associated with the spread of Covid-19’s Delta version.

Detroit’s Big Three is expected to attend the conference, which comes as projections for car production lost due to the increase in chip shortage. As part of the government’s effort to figure out how to help, the Biden administration is soliciting information regarding a variety of issues affecting the shortage. 

The conversations will be led by US Secretary of Commerce Gina Raimondo and National Economic Council Director Brian Deese. The administration has already convened other conversations with chip firms and other businesses about supply problems.

The apparent

 method to expand production is to build more factories, but this is hardly a magic solution. New facilities are expensive, usually costing billions of dollars, and there is no guarantee that demand will continue to grow in the future.

Effects of Chip Shortage

Because the number of chips used in automobiles has increased, the shortfall has particularly affected the automotive industry. Assisted driving and hybrid engines often utilize a lot more chips than previous models that don’t have modern features.

According to the consulting firm AlixPartners, the automobile sector could lose $210 billion in revenue this year because of chip shortages and other supply bottlenecks. That’s more than double the level of losses predicted just a few months ago. Also, according to AlixPartners, car manufacturers will lose 7.7 million vehicles this year, up from 3.9 million predicted in May.

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