Chip shortage to worsen in Q2

  26 April 2021

Major OEMs are warning everyone in the auto industry to prepare for a bigger production hit in Q2 than Q1 due to the global chip shortage. Seat CEO Wayne Griffiths said it is the “biggest challenge” faced by the company at the moment with production currently “hand to mouth”. Decisions on which cars to build are made only after chips are received from suppliers.

Volkswagen Group production was down 100,000 in Q1 and it will worsen in Q2. CEO Herbert Diess has conceded the company will now not be able to make up the shortfall in 2021 and “further adjustments to production cannot be ruled out”.

Jaguar Land Rover last week confirmed shutdowns at Halewood and Castle Bromwich due to the semiconductor shortage, while Ford is shutting its Merseyside facility for a month and scaling back its Dagenham diesel plant. In Germany, Daimler AG has put 18,500 workers on short-time working through to the summer. Earlier in the year, Audi furloughed 10k staff to cope with the “crisis upon a crisis”.

Chuck Robbins, boss of networking giant Cisco, warns the industry the shortage is set to last for most of the year. “We think we’ve got another six months to get through the short term.” After that, new-build chip factories designed to stem the shortage will start coming onstream.

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