Business Essentials for Professionals


IHS Markit Report Predicts Further Light Vehicle Production In 2021 Due To Chip Shortage

IHS Markit Report Predicts Further Light Vehicle Production In 2021 Due To Chip Shortage
The global production of light vehicles is expected to fall by about five million this year because of a global shortage of semiconductors as well as delayed packaging and testing of the chips, claimed a report from IHS Markit said.
That marked the largest estimated drop in vehicle production outlook within the last nine months.
The challenges to t global supply of semiconductors for cars will likely force auto companies to cut down production of light vehicles throughout the world by about 6.2 per cent for 2021 and 9.3 per cent for 2022, which amounts to 75.8 million units and 82.6 million units, respectively, the IHS reports said.
The Covid-19 pandemic induced lockdown measures imposed by the government to curb the spread of infections in early June in Malaysia have impacted the packaging and testing operations of factories in the semiconductor sector in the country, which has added to the challenges of the already existing global supply shortage of auto chips, The IHS report also said.
"Our interpretation of the situation in Malaysia, which is responsible for 13% of the global supply of semiconductors for the automotive industry, has become more pessimistic," IHS said.
"The two-and-a-half-month backlog that has built up since June will take time to clear and is anticipated to extend well into 2022," the report added.
Shortage in supply of auto chips has forced slashing of output and sales forecasts by a large number of auto makers – America’s General Motors to Japan's Toyota. The already acute shortage of chips has been worsened by the resurgence of the Covid-19 pandemic in some Asian countries which are absolutely critical for the supply of chips globally.
During the first quarter of the year, lost production of vehicles because of the global semiconductor shortage was at 1.44 million units and it was at 2.6 million units in the second quarter of the current year, the IHS report noted.
For the current third quarter, the lost production is at 3.1 million units and is increasing by the day – and this is almost double of the previous forecast made by HIS.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc