Just as the global auto industry was getting back on its feet, after the COVID-19 pandemic, automakers around the world are now facing another challenge: a shortage of semiconductor chips. Many international companies, including Tesla, Toyota, Volkswagen, General Motors, Honda, and Ford, have halted their production lines. Looks like Pakistani automakers, especially the new entrants, will face the same fate.
Semiconductor Chip Shortage
Semiconductors are a crucial part of every vehicle. From powering the car entertainment and driver assistance systems to controlling airbags and power windows, these little devices are the brains behind dozens of integrated circuits. Frankly, you cannot build a car without semiconductor chips.
There are only a handful of semiconductor chip manufacturing companies globally. Those are busy catering to the needs of the electronics industry, such as phones, laptops, and other devices, because they form the bulk of their revenue. The Automobile industry also contributes to that revenue but not as much. Since automobiles are not a priority for the chip manufacturing companies, the automakers are feeling the heat of the chip shortage.
The Aftermaths of the Global Crisis
The semiconductor chip crisis has led many leading companies to shut down their plants, reduce production, or do both. Tesla had a two-week shutdown at its California plant. Honda also had shutdowns at its plants in the UK and Japan. Toyota had a three-week shutdown at its Texan plant and eight weeks of reduced production.
Rumour has it that Hyundai Nishat Motors has cut down the production of its SUV, the Hyundai Tucson, and KIA Lucky Motors is to follow the same path.
As per media reports, the semiconductor chip crisis could last for almost a year, which means that automakers around the world will have to go through massive sales losses in 2021. That’s not great news for the automotive industry. We hope that things turn around for the better.
