Ford Cuts Production in Half Due to Chip Shortages

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Ford Cuts Production Due to Chip Shortages

After losing 17 percent of its production due to chip shortages in the first quarter, Ford announced it will cut production in half for the current quarter.  The additional cut back is due to a fire at the plant of Renesas Electronics, one of its chip suppliers.

However, Ford’s Chief Financial Officer John Lawler said he expects semiconductor problems to reach a bottom this quarter and then start improving through the rest of the year, reported CNBC.

In total, Ford expects to sacrifice production of 1.1 million vehicles this year due to the chip shortages.

The shortages are expected to cost the total global automotive industry over $60 billion in sales this year, according to AlixPartners.

Also, yesterday, Honda announced it will stop production at three auto factories for five or six days next month due to chip shortages and BMW warned of delays in production, reported Engadget.

A recent podcast from Automotive News noted that the car companies are accustomed to working with suppliers that offer chips just for auto companies. But as cars increasingly include more computerized functions, car makers are sourcing chips also used by consumer electronics companies. They need to learn to “think like a consumer electronics company” and employ different strategies for securing chips, said Dave Opsahl, CEO of software company Actify on the Daily Drive (subscription may be required).

That said, Apple, Samsung and other leading consumer electronics companies are all facing product delays due to chip shortages.

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