Semiconductor Shortages Generate Uncertainty

GM has announced that starting on Feb. 8, it will temporarily stop production at three plants in North America: Ontario, Kansas and San Luis Potosi, reports Expansion. The American vehicle producer explained that this partial cease of operations is due to a global shortage of semiconductors, caused by increased demand from the technological industry. Waiting times for semiconductor supply have increased from between 12 and 16 weeks to more than 26 weeks, reported MBN.

“Despite our best efforts, the semiconductor shortage will impact our production at some plants globally. Currently, the whole impact is being evaluated, although our focus is on continuing to produce the vehicles with the highest demand, such as pickups and large SUVs … for the benefit of our customers,” explained General Motors, reported El Economista. "Our Purchasing and Supply Chain team has been working very closely with our suppliers to find solutions to our supply requirements for these auto parts to mitigate the impact on GM’s operations," the company told Expansión. However, GM did mention that the supply of semiconductors for the automotive industry has an uncertain future.

As a result of the COVID-19 pandemic, many OEMs closed down their plants, causing many chip manufacturers to allocate most of their supply to consumer-electronics producers. However, this ended up becoming the root of a semiconductor supply shortage problem. Last month, MBN reported that a global shortage of semiconductors is affecting the automotive and auto parts industries due to the high demand for computer equipment and telephones generated by the pandemic’s work-from-home dynamic. IHS Markit, a business research and analysis firm, also commented on the disruption that shortages could bring to the automotive sector in 1Q21. IHS Markit argues that the biggest disruption could be noted in Mainland China, with a deficit of 250,000 units in 1Q21. In Europe, losses could total around 100,000 units, while production levels in North America could also be negatively affected. Due to the instability the shortage has caused, GM told el Economista, that its “intention is to recover all lost production in these plants, as soon as possible.” However, MBN has mentioned that these challenges are expected to be solved by 2H21.