Chip Shortage

September 7th, 2021 by

Pandemic Impacts


What is a semiconductor chip? They are circuits composed of wires and transistors to conduct electricity. They are found in many products like smartphones, computers, video game consoles, and vehicles.


Why is there a shortage? Due to COVID-19, production of many companies were temporarily shut down or suspended, especially the semiconductor factories. With such a high demand for all electronics, it is difficult for the semiconductor factories to stay on top of supply for all.


Why are they needed in vehicles? Without the chips, electronical systems in vehicles won’t function. Some of the features they power are push start/stop, backup cameras, lane change assist, adaptive cruise control, remote start, airbag deployment, blind-spot detection, and emergency braking. Depending on what features the vehicle has, vehicles may need over 3,000 chips.


What was the impact for the automotive industry? 

  1. Inventory has decreased: Although, GM has continued production of certain vehicles, the somewhat finished vehicles are sitting at the assembly plants waiting for the necessary chips.
  2. Custom vehicles have erratic constraints: Weekly if not daily, constraints are changing for what is available for ordering a new car. These constraints can vary from being able to have a sunroof to heated seats to floor liners.
  3. Parts & Accessories are on backorder: Since inventory is low and people are waiting for new models, they may be sticking with their old vehicles. This can result in more maintenance or wanting to upgrade. With a high demand for parts and accessories, suppliers can’t keep up.


Everyday we are working through the challenges the pandemic has caused and to keep our customers informed about what’s going on. If there is anything we didn’t cover or you have more questions, please don’t hesitate to contact us!


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Posted in Tip of the Week