Let the Chips Fall Where They May - Semiconductor Shortage Stymies Automakers
An eight-day shutdown at Ford Motor Company's (NYSE:F) (Dearborn, Michigan) Louisville Assembly Plant in Kentucky has drawn a lot of news media attention as a symptom of a global semiconductor shortage.
Ford pushed forward a scheduled downtime period to January 11, citing a lack of available computer chips for its vehicles, according to local television station WDRB. Production at the SUV plant was scheduled to restart today, January 19.
The problem isn't limited to just Ford, nor is it limited to the U.S. Other major automakers, including Nissan Motor Company (Yokohama, Japan), Volkswagen AG (Wolfsburg, Germany), Toyota Motor Corporation (NYSE:TM) (Aichi, Japan) and Fiat Chrysler Automobiles (NYSE:FCAU) (Amsterdam, Netherlands), have cut back production at various plants across the globe due to the shortage in semiconductors, which are essential components in today's autos. Michigan's Center for Automotive Research was quoted by CNN Business as saying the average car has between 50 to 150 chips in it.
The shortage began late last year after auto demand bounced back following COVID-19-pandemic-related plant shutdowns, according to CNN. Semiconductor production capacity also has been challenged by a jump in demand for laptop computers and gaming consoles as more consumers work from home amid the pandemic, according to Reuters. The shortage is likely to last well into this year, according to news accounts.
Many U.S. manufacturers, including those in the automotive sector, depend heavily on overseas semiconductor producers, particularly those in eastern Asia. Industrial Info is tracking more than $220 billion worth of capital semiconductor project activity across the globe. Project activity in Asia easily outdistances activity in other regions.
However, there are some big U.S. investments on the horizon, such as a $12 billion facility in Phoenix, Arizona, planned by Taiwan Semiconductor Manufacturing (TSMC) (NYSE:TSM) (Hsinchu, Taiwan). In December, TSMC acquired 1,129 acres for the planned 3.8 million-square-foot manufacturing campus. U.S. Secretary of Commerce Wilbur Ross praised the project last year, saying it was another indication that now-outgoing President Donald Trump's policy "has led to a renaissance in American manufacturing and made the United States the most attractive place in the world to invest." For more information, see Industrial Info's project report.
In Marcy, New York, Cree Incorporated (NASDAQ:CREE) (Durham, North Carolina) is planning to start structural work this quarter on its "North Fab" silicon carbide wafer fabrication plant at the Marcy Campus of the SUNY Polytechnic Institute. To be located on a 450-acre site, the 500,000-square-foot facility will cater to the needs of the automotive and electric vehicle sectors, among others. Completion is planned for the first quarter of 2022. For more information, see Industrial Info's project report.
In Hopewell Junction, New York, construction is planned to kick off this quarter on ON Semiconductor Corporation's (Phoenix, Arizona) semiconductor manufacturing plant renovation and expansion project to establish the company's first 300-milimeter chip manufacturing facility. Completion is planned for the end of 2022. ON is a top-10 global semiconductor supplier to the automotive industry, according to its website. For more information, see Industrial Info's project report.