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Chip Shortage Prolongs Ford Production Halt At 5 North American Factories

Chip Shortage Prolongs Ford Production Halt At 5 North American Factories

Ford Motor Co (NYSE: F) is planning to prolong production halt at five of its North American manufacturing facilities indicating the ongoing global semiconductor shortage is worsening, The Wall Street Journal reported on Wednesday.

What Happened: According to the report, Ford will idle factories in Chicago, suburban Detroit, and Kansas City for another two weeks, extending the closures through May 14. In Ontario, a plant that makes SUVs will extend downtime for a week in early May.

The latest halts imply production for its most profitable pickup truck F-150 will remain limited alongside the production of the Explorer full-size SUV and Transit vans, the report said.

The Detroit plant which makes trucks and is located near the automaker’s headquarters resumed production on Monday after a two-week pause. Production was halted at another pickup plant, in Kansas City last week which will remain down through May 10, the report said.

See Also: GM, Ford's Temporary Shutdowns Over Chip Shortage Spread To More Factories In North America

Why It Matters: Semiconductor chip shortage has forced automakers across the world, from Detroit to Japan, to halt production and rush to make their most profitable models first. The shortage is now spilling over to other sectors including laptops, smartphones, and consumer appliances.

Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM), the world’s largest contract chipmaker, last week told analysts in a post-earnings call that it expects chip shortage to start easing next quarter but still continue to last throughout 2021 and potentially into next year.

See Also: Apple iPad, MacBook Production Delayed Over Chip Shortage: Report

Ford, which is scheduled to report its first-quarter earnings next week, has already forecast that 2021 profit could be hit by $1 billion to $2.5 billion due to the chip shortage. Bigger rival General Motors Company (NYSE: GM) has estimated the chip shortage could cut up to $2 billion from this year’s profits.

Price Action: Shares of Ford closed 2.45% higher at $11.73 on Wednesday.


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