AlixPartners today released its latest forecast regarding how much the ongoing semiconductor shortage is costing the global automotive industry. The consultancy’s updated estimate is that the shortage will cost the industry globally $210 billion in lost revenues this year. This is a breathtaking increase its estimate in May of $110 billion. 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.
Exec Summary: There are no more cushions left in the industry when it comes to production or obtaining material. Any shortage or production interruption in any part of the world affects companies around the globe. Worse, the impacts are now amplified due to all the other shortages.
“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 labor 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,”Wakefield said.
About Ken Zino
Ken Zino, publisher (kzhw@aol.com), is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
Zino is at home on test tracks, knows his way around U.S. Congressional hearing rooms, auto company headquarters, plant floors, as well as industry research and development labs where the real mobility work is done. He can quote from court decisions, refer to instrumented road tests, analyze financial results, and profile executive personalities and corporate cultures.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
U.S. Secretary of Commerce Gina Raimondo and Deputy Secretary of Commerce Don Graves released the following statements today after Intel announced it would be investing $20 billion to build two semiconductor facilities outside Columbus, Ohio, and create 3,000 Intel jobs, and 7,000 construction jobs over the course of the build.
Statement from Secretary Gina M. Raimondo:
“This investment is a big win for Intel, for American manufacturing, and for American consumers who can look forward to lower prices as we bring home production of the semiconductors that keep our economy running. From his first day in office, President Biden has recognized that if we want to compete globally, we need to invest domestically. That investment begins with revitalizing our manufacturing economy, strengthening American supply chains, and bringing good-paying jobs back from overseas.
“I’d like to applaud Intel for this investment in our country and in the State of Ohio. Intel’s work is essential to our efforts to rebuild America’s chip building capacity and create the kinds of good-paying jobs that support a vibrant American economy. Other countries aren’t waiting and every day we wait, we fall further behind. As Commerce Secretary, I want those jobs and those investments here in America. While we celebrate Intel’s announcement today, it is more essential than ever that Congress move swiftly to pass the President’s proposed $52 billion in funding for domestic semiconductor production as part of legislation similar to the U.S. Innovation and Competition Act.”
Statement from Deputy Secretary Don Graves:
“The United States was once a leader in the production of semiconductor chips. But today, we account for only 12% of global production. This administration is proud of Intel’s work to bring these good-paying manufacturing jobs to Central Ohio. If we are serious about increasing American competitiveness, protecting our economic security, and hitting President Biden’s electric vehicle goals, it is imperative that we reinvest in this critical industry. This project is a crucial step in growing America’s domestic chip manufacturing capacity.”