Microchips are in high demand. And there just aren't enough of them to go around. It's a problem that has plagued the auto industry since the pandemic-induced shutdowns and doesn't seem to letting up.
Automotive News estimates that, in 2022 alone, North America and Europe each will see about 1.68 million and 1.53 million vehicles cut from manufacturing schedules, respectively. China is expected to lose about 216,000 vehicles, while the rest of Asia was projected to cut production for 861,400 vehicles because of the microchip shortages.
Globally, the auto industry is expected to lose 4.56 million vehicles overall.
Moving into 2023, there is both good news and bad news.
The good news? Investments are coming.
In the U.S. between Jan. 20, 2020, and Aug. 9, 2022, companies earmarked more $150 billion for microchip production. And the bipartisan CHIPS and Science Act is expected to bring another $52 billion in government subsidies to U.S. semiconductor research, design and production.
That all amounts to good news for the auto industry. But it's going to a while before those production lines come on stream. And that means the microchip pinch is likely to continue, at least for a little while.
"I don't think it goes back to a normal or an essential non-disruption-type of environment at least through 2023," Jeff Schuster, president of Americas operations and global vehicle forecasting for LMC Automotive, said during this year's Center for Automotive Research's Management Briefing Seminars. "… I think it is going to be far from normal for some time yet."