As 2021 started, a few automakers acknowledged that an obscure supply chain inconvenience was disrupting some of their vehicle production schedules. Here and there, some factories were experiencing backlogs on deliveries of semiconductors, also referred to as microchips.
But in early 2021, the word "disruption" was almost becoming tiresome among automakers. A Texas blizzard or a Georgia parts plant fire might send component makers scrambling for workarounds. But microchip deliveries? Halting a roaring comeback of new-car sales? How ridiculous was that notion?
As serious as it sounded in those early weeks, the smart bet from around the industry was that it would only be serious for a few weeks, or at worst, a few months. Production forecasters at AutoForecast Solutions warned in February that the microchip delivery snarl might last into the second quarter of 2021, and estimated that as many as 1.3 million vehicles might get trimmed from factory schedules around the world before the situation was resolved. That scenario sounded extreme to many.
But big forces were in play. American consumers were not merely emerging from pandemic lockdown and returning to dealer showrooms in big numbers, they were buying new-generation vehicles, loaded with electronics. Automakers are now increasingly competing for semiconductor supplies against electronics makers and cellphone producers of enormous size and scale — which are facing booming demand themselves. And when the pandemic struck and automakers closed factories for the health emergency, automakers essentially gave up their place in line for chip allocations. Then as 2021 began and consumers clamored for new vehicles, the auto companies were wishing they hadn't. They now needed microchips, and there weren't enough.