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US Auto Body Seeks Government Aid In Combating Chip Shortage Issue

US Auto Body Seeks Government Aid In Combating Chip Shortage Issue
While issuing a warning that the global shortage of semiconductor chips could result in auto companies in the United States facing the threat of manufacturing 1.28 million fewer vehicles this year and production of vehicles being disrupted for another six months, an auto industry group of the country has appealed for help to the government.
The Alliance for Auto Innovation said in written responses to a government-initiated review that the proposed bill for expansion of the semiconductor production in the US to meet the needs of the auto sector should also include a dedicated portion of the funding towards that end by the Commerce Department of the country.
As number of Federal agency actions to address the chip crisis was ordered by the US president Joe Biden in February and is also seeking to secure a government finding to the tune of $37 billion for legislation for accelerating the manufacturing of semiconductors in the US.
Some funding should "be used to build new capacity that will support the auto industry and mitigate the risks to the automotive supply chain evidenced by the current chip shortage," the group's chief executive, John Bozzella, wrote.
The group further also said that the US government could specify "a particular percentage – that is reasonably based on the projected needs of the auto industry – be allocated for facilities that will support the production of auto grade chips in some manner."
All of the major auto companies of the US that have manufacturing units in the country is r3wepresented by this industry group and includes the likes of General Motors Co, Ford Motor Co, Volkswagen AG, Toyota Motor Corp and Hyundai Motor Co.
The current global shortage of semiconductors was triggered by a sudden and sharp increase in demands for electronics products and home appliances during the Covid-19 pandemic as people were forced to stay back home and work, attend classes and get entertained at home. During this period, consumers stocked up on laptops, gaming consoles and other electronic products which resulted in tighter inventory.
During the Covid-19 pandemic, the auto companies in particular scaled down production because of slow demand and even shut down plants to save money as well as because of restrictions imposed to prevent the spread of the pandemic. However with a revival in demand for cars, the auto companies were ready to restart production but found that the chip making companies were engaged in meeting the demand and orders from their customers who make consumer electronics products – an industry where there has been a surge in demand for premium devices - both for work and leisure.
Most of the major global auto makers have been hit by the chip shortage and many have been forced to suspend production. For example, the US based auto company Ford announced last week that it could bring down its production output at seven of its assembly plants in North America while an announcement of suspension of production in Georgia for two days was made by Kia Motors.

Christopher J. Mitchell

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