America’s semiconductor chip shortage places growing pressure on the trucking industry and political posturing won’t fix the problem.
Recent reports indicate that North American automotive plants have routinely stopped production and furloughed workers because they lack the parts to complete cars, SUVs, and Class 8 trucks, among other vehicles. The supply chain shortage has resulted in mid- and heavy-duty truck prices rising at an alarming rate. As production slows against rising demand, even the cost of used semi-trucks appears to be skyrocketing.
“Missing chips are now expected to lower global output by 3.9 million vehicles in 2021, or 4.6 percent. Ford alone expects to produce 1.1 million fewer vehicles, leading to a $2.5 billion earnings hit,” Time magazine reports. “As automakers and chipmakers scrambled for equilibrium, the White House stepped in to help, urging industry leaders to untangle the supply chain and increase production.”
U.S. Commerce Secretary Gina Raimondo went on the record indicating the White House could employ the Defense Production Act to force companies to pivot and produce vital semiconductors. But what Washington, D.C., insiders may not understand is that the U.S. no longer has the manufacturing base to produce enough semiconductors to meet demand. And although America once led the world in these technologies, few outfits now have the ability to produce the most intricate chips.
“Right now, every single end market for semiconductors is up simultaneously. I’ve been in this industry 27 years. I’ve never seen that happen,” Marvell CEO Matt Murphy reportedly said, a semiconductor manufacturer. “If it stays business as usual, and everything’s up and to the right, this is going to be a very painful period, including in 2022 for the duration of the year.”
Taiwan-based TSMC produces upwards of 90 percent of the world’s most advanced chips and its leadership team indicates a price hike of at least 20 percent going forward. Foreign corporations such as Infineon (Germany), NXP (Netherlands), and Renesas (Japan) ranked as the leading automotive semiconductor manufacturers in 2020. Meanwhile, heavy-duty truck manufacturers such as Mack suffer on-and-off production stoppages due to chip shortages and supply chain hiccups. Mack’s parent corporation, Volvo, indicates supply disruption has negatively impacted its Allentown, PA, plant.
“In the beginning of the (second) quarter, the group will implement stop days across its global truck manufacturing operations,” Volvo officials reportedly stated. “In total, these are currently estimated to be between two and four weeks depending on production site. In addition, disturbances are also expected to impact the group’s other business areas.”
Mack and Freightliner tractors are built with upwards of 15 computer systems, and they rely on largely foreign-made semiconductors for completion. Although the Class 8 truck manufacturers enjoy pre-orders running deep into 2020, buyers should anticipate lengthy delivery delays.
Although the White House and federal government continue to talk big, the boots-on-the-ground realities are that America does not have the semiconductor infrastructure to meet domestic demand. Achieving self-reliance could be years away
Sources: ccjdigital.com, cnbc.com
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