A global shortage of semiconductors which has led to automakers worldwide shutting assembly lines has, in some cases, been exacerbated by the outgoing Trump administration’s actions against key Chinese chip factories, industry officials told Reuters .

The shortage, which caught much of the industry off-guard and could continue for many months, is now causing Ford, Subaru , and Toyota Motor to curtail US production, the news agency reported on Friday (15 January).

Other automakers affected include Volkswagen , Nissan Motor and Fiat Chrysler Automobiles.

Reuters said the problems stemmed  from a confluence of factors as auto manufacturers compete against the sprawling consumer electronics industry for chip supplies. Consumers have stocked up on laptops, gaming consoles and other electronic products during the COVID-19 pandemic, creating tight chip supplies throughout 2020.

They have also bought more cars than industry officials expected last spring, further straining supplies, the report added.

In at least one case, Reuters said, the shortage ties back to outgoing president Donald Trump’s policies aimed at curtailing technology transfers to China.

One automaker moved chip production from China’s Semiconductor Manufacturing International , or SMIC, which was hit with US government restrictions in December, to Taiwan Semiconductor Manufacturing (TSMC) in Taiwan, which in turn was overbooked, a Reuters source said.

An auto supplier confirmed to the news agency TSMC had been unable to keep up with demand.

“The systemic aspect of the crisis is giving us a headache,” a supplier executive told Reuters. “In some cases, we find substitution parts that could make us independent from TSMC, only to discover that the alternative wafer manufacturer has no capacity available.”

TSMC and SMIC did not respond immediately to Reuters’ requests for comment.

On an earnings call with investors Thursday, TSMC Chief Executive CC Wei said there was a shortage of automotive chips made with “mature technology” and that it was working with customers “to mitigate the shortage impact”.

Reuters noted the tiniest of chips can halt production – the Ford plant in Kentucky making the Escape SUV was idled because of a shortage of a chip in the vehicle’s brake system, a union official in the plant told the news agency.

Ford also will idle its Focus plant in Saarlouis, Germany, for a month, starting next week, because of chip shortages.

The report noted all chips start life as a silicon wafer that takes about 90 days to process into a chip.

The chip making industry has always strained to keep up with sudden demand spikes, Reuters added. The factories that produce wafers cost tens of billions of dollars to build, and expanding their capacity can take up to a year for testing and qualifying complex tools.

“The long and short of it is, demand is up about 50%. And there’s no asset-intensive industry like ours that has 50% capacity lying around,” Mike Hogan, SVP at chip manufacturer GlobalFoundries, and head of its automotive unit, told the news agency.


Reuters said tight capacity and soaring demand had made it difficult for chip producers to absorb two shocks from the Trump administration.

The White House last September banned Huawei Technologies from buying chips made with American technology so Huawei stockpiled chips ahead of the ban in order to keep building what products it could after it took effect.

Meanwhile, Huawei’s rivals, eyeing a chance to grab market share, started snapping up chips, analysts told the news agency.

Next, the US government enacted rules that bar SMIC from using some US tools to make chips, a move that has prompted at least some of SMIC’s customers to look for a different chip factory because of concerns that production could be disrupted.

“There’s a fear of using a Chinese chip factory if the US is going to put them on an entity list,” Daniel Goehl, chief business officer of UltraSense Systems , told Reuters, referring to possible further restrictions.

A US Commerce Department spokesman declined to comment to the news agency on the implications of the SMIC and Huawei blacklistings for the auto sector but said the top priority was “to ensure the Export Administration Regulation protects US national security, economic security, and foreign policy interests”.

Analysts told Reuters the automotive chip shortage was likely to persist for as long as six months.

An AutoForecast Solutions report cited by the news agency estimated the global auto industry had already lost volume 202,000 vehicles due to curtailed production as of 13 January.

Executives at automakers and suppliers told Reuters they were adapting production schedules to protect chips used in higher profit vehicles while companies were weighing sourcing chips from more suppliers and increasing stock levels in the future.

“It’s four-dimensional chess all day long,” one auto official said.

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