Experts familiar with the microchip manufacturing sector are issuing a dire warning to automakers: the ongoing chip shortage could be set to last well into 2023.
Kazunori Ito, head of equity research at Chicago-based investment research firm Morningstar Inc., told investors in a conference call last week that the worst of the microchip shortage “should go away in 2023 or so.” Ito also said the ongoing supply crunch is “stemming from suppliers’ lack of output and [customers] trying to buy more components than what they need.”
Isao Matsumoto, CEO of Japan-based automotive chip supplier Rohm Co., echoed this sentiment when speaking to the media last week.
“All of our production facilities have been running at their full capacity since September last year, but orders from customers are overwhelming,” Matsumoto said, as quoted by Kelley Blue Book. “I don’t think we can fulfill all the backlog of orders next year.”
“Our plan to increase the quantity of chips we ask others to make on our behalf hasn’t changed, but these foundries have no such capacity right now, and next year looks very tight as well,” he added. “Maybe we can resume it from a year after next, albeit gradually.”
This likely means that intermittent plant shutdowns driven by a lack of chip supply are likely to last for the rest of 2021, 2022 and into 2023. These chip-related production setbacks have hit virtually every major automaker, including General Motors, which recently extended several plant shutdowns through to September. Toyota also announced plans to pause production at 14 of its global facilities last week.
These plant shutdowns have caused a frenzy at dealerships, driving up demand and reducing incentive spending as customers fork over the MSRP or sometimes more to get to the vehicle they want. High new car demand has also driven more consumers to used dealerships, creating a backlog of second-hand vehicles and driving up prices. The average advertised price for a used car in America at the end of July sat at $25,500 – 28 percent higher than in July of 2020.