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Chip Shortage as Obstacle in Automotive Industry

Chip is a hot commodity these days while. The global Chip shortage of computer chips has caused a lot of problems in the automotive industry. Some companies have been hurt more than others. According to Automotive News, Toyota is having a hard time because there aren’t enough chips. Nissan, on the other hand, is doing better than expected, which is a surprise.

In the last three months, Toyota’s operating profits fell by 21%, which made the company downgrade its worldwide sales and production forecasts. Toyota is the world’s largest automaker, and it’s known for being very profitable. Toyota’s global sales forecast for this fiscal year, which ends on March 31, is expected to fall to 8.25 million vehicles, down from 8.55 million. This is a big change from the previous estimate of 8.55 million.



Chip Shortage for Toyota and Nissan:

Nissan, on the other hand, is usually behind Toyota in many areas. The company’s operating profit doubled in the last quarter thanks to better cost controls and pricing power, as well as other things. Because of this, the automaker’s earnings for the year are looking better than they were before. According to Nissan’s most recent financial report, year-over-year retail sales around the world fell a little less than the rest of the industry.

If you look at Nissan’s global net revenue per vehicle in the third quarter of the fiscal year 2021, it went up by 13% compared to the same time last year.


Nissan has been able to keep incentives low because of low inventory levels in the car business. This has helped the company make more money. If you want to buy a car from the company, you won’t have a problem. But just like Toyota, Nissan thinks it will sell fewer cars and trucks this fiscal year, and that’s not good. The automaker now thinks it will make 3.8 million cars this year, down from its previous estimate of 4.4 million.


People at Nissan sent an email to say that the company has become more profitable

“For the last two years, we’ve been working on our Nissan NEXT plan to change how we do business, which would lead to better performance. We keep getting more market share, and each month, retail sales stay the same.” The automaker thinks that production will go up a little each month through the next three months “.

Although, we’ll keep cutting back on a few of our most important models. The availability of the Altima, Murano, Titan, Frontier, Kicks and Sentra should go up, which is good “The spokesperson said that.


Beyond what was said in the Automotive News story, Toyota didn’t say anything about production plans or how much money it expects to make in the future.


Chip Marathon between Companies


Chip shortage effects on Nissan, Toyota, Subaru, Ford, Volkswagen, and Hyundai:

These giants are all hurting because there aren’t enough computer chips in the world to make cars. As Nissan’s most recent financials show, some people have it a little better than others. This is bad news for everyone, but not everyone has it as bad as others.

COVID-19 has had a huge impact on how we live, from how we travel and how we learn to how people work. This pandemic has also had a big and bad effect on the auto industry, clogging up supply chains around the world and putting a huge strain on vehicle production. There are still a lot of problems with semiconductors two years after the coronavirus spread all over the world.


As a vice president of global automobile forecasting at AutoForecast Solutions, Sam Fiorani says that the chip shortage is still a big deal.

There are many important reasons for this. “This isn’t a problem that can be solved quickly.”Still, automakers of all sizes are having trouble getting semiconductors, small parts that are needed in even the most basic vehicles. The problem is getting worse.

The computer chips that power everything from driver assistance features to navigation systems to steering wheels are getting more powerful as cars get more and more complicated, and that’s only going to happen as cars get more and more complicated.

Toyota is still having problems with shortages that will hurt manufacturing. “Our teams are working diligently so that production can run as smoothly as possible. In North America, we expect about 25,000 to 30,000 cars to be sold in February, “The company told Roadshow. The good news is that Toyota doesn’t think these shortfalls will affect jobs.



Read more: Best Electric Vehicle One Can Buy in 2022

GM has the same problems

A few months ago, the company said that it couldn’t offer certain features on a number of models because it didn’t have enough chips. But things are getting better now. Because of the global shortage of semiconductors, “fortunately, at the moment we don’t have any North American production lines that are closed because of that.”

In Fairfax, Kansas, which makes the Chevy Malibu and Cadillac XT4, and Ramos Arizpe, Mexico, where the Chevy Blazer and Equinox SUVs are made. Second shifts have just started back up at these two plants.

Semiconductors being organized on chip

The effects of this chip shortage on the world can be seen in many ways.

The chip shortage in 2021 led to a huge drop in the number of vehicles being made. LMC Automotive president Jeff Schuster says that Ford was hit the hardest and that they were hit early. “Ford was hit the hardest, and they were hit early.” This is because it had a lot of high-profile launches, like a new F-150. A figure from Schuster says that last year, the Blue Oval missed out on about 1.25 million cars.


But Ford wasn’t the only car company to make mistakes.

It took Volkswagen a little longer than planned to make 1.15 million cars, but GM and Toyota both missed their goal by about 1.1 million cars. Stellantis also missed the mark by about 1 million cars. But not all businesses were hit the same. I think that as a group, the Japanese and Korean Manufacturers were a little more protected. They live near China, where more and more chips are made.

The reason Chinese manufacturers felt less of an impact than their global competitors is that they had more time to adapt to the new rules.


Consumers, like automakers and medical device manufacturers, have fewer computer chips in stock now than they did in 2019. This means that in 2021, they’ll have less than 5 days’ worth of chips on hand. Because of this, things could get very bad very quickly.

People in the US could lose their jobs and their families’ lives if a COVID outbreak, catastrophic event, or political unrest shuts down a semiconductor plant in another country for even a few weeks for any reason, a report said. This is a risk not lost on car companies.

Global Chip shortage explained

How did chip shortage happen?

People in the auto industry are some of the brightest and most knowledgeable people in any field. There are things they do every day that they have to think about for years and make sure they meet safety and fuel economy standards as well as the needs of the people who buy them.

When the semiconductor industry makes a mistake together, it’s a big surprise. People didn’t think this would grow into what it did, but car companies should have known about the risks.


Chips are now in almost everything we buy, Fiorani said. At the start of the pandemic, automakers cut their orders for semiconductors because they thought there would be a big drop in sales.

In addition, he said: “OEMs got out of line, and the chipmakers moved that factory space to make chips for iPhones and PlayStations and other things.” When car sales are hot again, chipmakers can’t keep up with the demand, because all of their space has been used up. Unfortunately, it’s not as simple as turning the lights back on and getting back to work.


Another thing that Fiorani talked about was making money apart from chip shortage.

Older chips are needed by the automotive industry because they make less money for the semiconductor companies that make them. This is how it works: It takes a lot less processing power to run a few parking sensors than it does an iPhone 13 Pro.

Also, for safety, car companies use designs that have worked for years, chips that work in all temperatures, humidity levels, and other situations, and so on. Nvidia, Texas Instruments, TSMC, or any other chipmaker has been encouraged to make more advanced semiconductor materials at the expense of their customers, the people who buy their cars.

Read more: The global chip shortage explained

Solutions to the chip shortage problem

Still, there are a few ways to make sure there will be a steady supply of chips for cars in the years to come. In the US, we could make more of the things that foreign companies make. If both strategies are used, Schuster thinks they’ll be the best way to solve this problem, because chip demand isn’t going to stop growing. Gaming, smartphones, and the internet of things are going to use more and more semiconductors in the next few years, so they’ll need more and more of them.


Making chips at home is important, but it’s not a magic bullet.

There is a big problem with this, says Fiorani: “One of these plants can’t just show up on its own.” For a new facility to be built, it takes months or even years. It must be in a place with a lot of certain things. Because chip factories are so specific, it’s not really possible to turn an old building into a chip factory. Then there’s the price.

I’ve been told that the number I’ve been told is $10 billion, and that’s just to start, he said. This is a business that requires a lot of money, which is another obstacle.

One more option, though, is to form a group of people in the car industry who work with chips. Fiorani said this might be the best way to avoid future supply shortages, but he said that getting car companies to work together on a project this big is likely to be a big deal.



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The prognosis: Be cautiously optimistic about chip shortage

If there’s any good news in all this, there’s still a lot of demand for cars and trucks. Companies can sell any cars and trucks they make. LMC Automotive thinks it will be a while before things get back to normal in a COVID-19 world.

This year, Schuster says the chip shortage should go away, but it could be a while before things get back to normal, which is what normal is in the COVID-19 world. Everything will start to come together in the second half of the year, says Fiorani. Hopefully, car production will return to pre-shortage levels.


There has been some investment in this field, and the government and industry are working together to make more chips that can be used in cars. “We just hope it’s enough to cover the losses.” As you can see, there is still a lot that isn’t clear right now, but hopefully, the worst of the semiconductor shortage in the auto industry is behind us now.

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