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Semiconductor Chip Crisis To Cost Auto Industry $110B In Revenue Loss

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Semiconductor Chip Crisis To Cost Auto Industry $110B In Revenue Loss
  • Consulting firm AlixPartners has raised the global semiconductor chip crisis-induced 2021 loss revenue estimate for the automotive industry from $61 billion to $110 billion, hammering the production of 3.9 million vehicles compared to the previous estimate of 2.2 million cars, Bloomberg reports.
  • The crisis has driven the need for supply chain resiliency to prevent future long-term disruptions, Reuters reports.
  • Ford Motor Co (NYSE: F) and General Motors Co (NYSE: GM) predicted Q2 as the worst hit from the crisis-induced production holidays at factories.
  • However, the crisis continues to severely impact Q3 as well. AlixPartners does not expect any industry recovery till the year-end.
  • The production cuts have led to higher prices for new and used vehicles.
  • Ford has redesigned its vehicles to avail the most common and handy chips. The company is also planning to increase semiconductor inventory and ink direct contracts with chipmakers by bypassing the auto suppliers.
  • Price action: F shares are trading higher by 0.26% at $11.58, and GM shares are up by 1.32% at $55.32 in the premarket session on the last check Friday.
 

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