Chip Shortage Continues To Take Toll With Ford, Nissan Idling Several US Production Sites

The global semiconductor chip shortage continues to cripple automakers as Ford Motor Co F idles two assembly plants alongside Nissan Motor Co NSANY becoming the latest Japanese automaker to cut production in the United States.

What Happened: Ford will assemble its highly profitable F-150 pickup trucks and Edge SUVs in North America without certain parts and idle two assembly plants due to the global semiconductor chip shortage, Reuters reported on Thursday. Nissan too said it will idle output at its U.S. and Mexico plants, according to Automotive News

Automakers from General Motors Co GM to Honda Motor Co HMC to Tesla Inc TSLA are shutting down assembly lines due to the shortages even as Asian chipmakers are rushing to expand their production capacity to meet a global semiconductor shortage that is hurting carmakers the most. 

Why It Matters: Semiconductor chip shortages are disrupting global supply chains and come at a time when economies are reopening after being hit by the pandemic and consumer demand for personal mobility is on the rise. 

Industry expects the supply situation to improve in the second half of 2021.

See also: How to Buy Ford Stock

Ford said it is also idling production at plants in Louisville, Kentucky, and Cologne, Germany. The No. 2 U.S. automaker has already forecast that 2021 profit could be hit by $1 billion to $2.5 billion due to the chip shortage. Bigger rival GM has estimated the chip shortage could cut up to $2 billion from this year’s profits.

Japanese automakers Toyota Motor Corp TM and Honda said earlier this week they would halt production at plants in North America.

Nissan said assembly plants in Tennessee and Mississippi will be largely halted through Monday. 

So far, South Korea’s Hyundai Motor Co HYMTF has managed to steer clear of the chip crunch by stockpiling semiconductors a year ahead and even purchasing more towards the end of 2020.

Price Action: Shares of Ford closed 1.58% lower on Thursday at $12.49.

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