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Auto Recovery From Chip Shortage May Be Long

Bill Koenig
By Bill Koenig Senior Editor, SME Media

The auto industry’s recovery from a global semiconductor shortage may be long and require revamping supply chains, according to a report by the Deloitte consulting firm.

There is “no quick fix in sight,” Deloitte said. The shortage “has caused every OEM to rethink its global supply network in terms of where critical risks might still be buried.”

The shortage of semiconductors has forced automakers to cut production of vehicles and impose temporary layoffs.

Ford Motor Co. said last month it expects its second-quarter production to plunge by 50 percent, with the lack of semiconductors the major factor. The Dearborn, Mich.-based automaker forecast that the situation will improve but that it may still lose 10 percent of its second-half output.

The chip shortage has “reinforced the need for better, more timely data rather than relying on a disjointed patchwork of information that is often inaccurate and out of date,” according to the report.

Deloitte said the chip shortage stemmed from “a lack of visibility up and down the value chain.”

According to the consulting firm, “It has been very difficult to create a line of sight through an entire automotive supply chain.” In the case of computer chips, there are “a small number of global semiconductor suppliers” that in turn reply on their own suppliers “which are subject to long lead times.”

What’s more, according to Deloitte, most automakers “have not adopted systems or processes to enable a real-time exchange of information with their suppliers.”

That is changing, the consulting firm said.

“OEMs are now directly engaging with tier 2 and tier 3 suppliers in the semiconductor network to secure the capacity they need while defining new rules of engagement going forward,” Deloitte said in the report.

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