May 2021

Chip Shortage to Cost Industry $100 Billion in Revenue this Year

The semiconductor chip shortage is expected to cost the global automotive industry $110 billion in revenue in 2021, according to consulting firm AlixPartners. The forecast is up by 81.5% from an initial forecast of $60.6 billion in late January. A number of factors have contributed to the increase, including a fire at a chip supplier plant near Tokyo and weather-related kinks in the automotive supply chain. The pandemic-induced chip crisis has been exacerbated by events that are normally just bumps in the road for the auto industry, such as a fire in a key chip-making fabrication plant, severe weather in Texas and a drought in Taiwan.

AlixPartners is forecasting that production of 3.9 million vehicles will be lost this year as a result of the shortage. That’s up from January’s forecast that estimated the shortage would cut production of 2.2 million vehicles.