Global Automakers flag concerns over chip shortage

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Biznextindia :  Despite registering 68 percent rise in retail sales in the June quarter, Jaguar Land Rover (JLR) is not very optimistic about the prospects in the September quarter (Q2), thanks to the chip shortage the automobile industry is facing.

The Tata Motors owned luxury carmaker has anticipated an operating cash outflow of about £1 billion with a negative EBIT margin in the second quarter and a substantial improvement in underlying operating cash flow in the second half of the financial year as chip supply improves.

Last April the company had to suspend production at two of its main facilities temporarily due to chip shortage. The company expects the semiconductor supply issue to continue in the second half of the year.

Not only JLR, the chip supply shortage has impacted productions of almost all leading carmakers worldwide.

Recently a senior official of BMW had said that the company has suffered a production loss of about 30,000 units in 2021 so far. The official had cautioned that the situation may continue in the second half (July-Dec) of 2021 (calendar year) .

 

Similarly, another global auto giant Ford has said that it could cut output across more than half a dozen factories across  the US in July due to the chip chortage.

Chips are central to the functioning of modern-day vehicles, and without access to the components, many automotive firms have been forced to slow down production. However, the COVID-19 pandemic has caused a huge surge in the purchase of electronic devices like PCs and tablets, and silicon manufacturers have been unable to keep up with ever-expanding demand, resulting supply shortage.

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