The ongoing semiconductor chip shortage is forecast to cost the global automotive industry $110 billion U.S. in lost revenue this year, according to consulting firm AlixPartners.
The forecast is up by 81.5% from an initial forecast of $60.6 billion U.S., which the New York-based firm released in late January when the chip shortage began causing automakers to halt production at their manufacturing plants.
AlixPartners said a number of factors have contributed to its upwardly revised forecast, including a fire at a plant near Tokyo, Japan for chip supplier Renesas and weather-related kinks in the automotive supply chain.
AlixPartners is forecasting that production of 3.9 million vehicles will be lost this year as a result of the semiconductor chip shortage. That’s up from January’s forecast that estimated the shortage would cut production of 2.2 million vehicles.
In the U.S., the shortage has caused the Biden administration to order a 100-day review of U.S. supply chains. About $50 billion U.S. of President Joe Biden’s $2-trillion U.S. infrastructure proposal is earmarked for the American semiconductor industry.
Automakers such as Ford (NYSE:F) and General Motors (NYSE:GM) expect the chip shortage to cut billions of their earnings this year. Ford said the situation will lower its earnings by about $2.5 billion U.S. in 2021. GM expects the chip shortage will cut its earnings by $1.5 billion U.S. to $2 billion U.S.
Semiconductor chips are important components of new vehicles in areas such as infotainment systems and power steering. AlixPartners says it expects the largest impact to production in the second quarter of this year and that the situation will gradually improve during the second half of the year and into 2022.
