In June this past year, we discussed concerns over Taiwan’s semiconductor production domination. With Taiwan producing almost half of the world’s computer chips, there is growing concern over Chinese aggression toward this powerhouse. Alternatively, the United States produces far fewer chips than American manufacturing demands, causing increased U.S. dependence on the world’s semiconductor production every year.

Supply and Demand

The security implications of the chip shortcoming are endless. The dependency on semiconductors has never been greater and chip manufacturing in the U.S. has fallen from 37% market share to 12% over the past 30 years. As China aims to be the global leader in chip manufacturing by 2030, they are massively subsidizing their semiconductor industry. The DoD continues to seek out computer chips from secure, domestic producers. But companies participating in DoD’s Trusted Foundry Program, designed to secure IT manufacturing providers to the military, are now at risk of falling behind technologically. Further, these vendors cannot keep up with demand.

Confounding the security issues with chip availability, commercial industry is experiencing similar demand problems. With the associated logistical challenges of the COVID pandemic, U.S. manufacturing finds itself at the end of a dwindling supply chain vying for the world’s semiconductors. Chip shortage problems are rippling across all sectors of American industry and the implications on daily life and inflation abound.

Auto Industry Takes the Biggest Hit

Auto manufacturing is one of the hardest hit industries by the chip shortage. Wait time for cars has now increased from weeks to many months. Cars have become more complex and electric cars are adding to the ever-increasing demand for chips with increased sophistication. Prior to COVID, visibility and flow of the semiconductor supply chain had not previously been a concern.

In February of this year, General Motors, Ford, Toyota, Volkswagen, Honda, Nissan, and Subaru all began adjusting production at North American plants to properly allocate chip shortfalls. Over the summer, new car availability became a tremendous challenge, with consumers suffering with both availability and high prices. Subsequently, as rental car companies and others accustomed to a continuous flow of new vehicle endured shortages, availability of used cars began to plummet. Inflated prices within the used car market soon proliferated. In locations like Tampa, a one- to three-year-old car in good shape, is often now selling for more than a new car.

Even though some car executives and analyst say they expect a gradual easing of chip shortages, they also predict disruptions will continue through March 2022 and beyond. Therefore, most major auto manufactures in the United States are fed up with the associated pandemic born logistical challenges. The computer chips shortage comprises 90% of the manufacturing slow down. Therefore, carmakers are starting to rethink the outsourcing of chips and other key parts.

Ford and GM Step Up

After a full year of semiconductor shortages throttling Ford and GM’s output, they are taking the semiconductor business into their own hands. Pandemic related disruptions are pressuring these companies to exercise greater control of their supply chains by bringing semiconductor production closer to the manufacturing facility or in some cases in-house.

According to the Wall Street Journal, Ford has outlined an agreement with the American semiconductor manufacturer GlobalFoundries to develop chips, which could lead to joint U.S. production. Fords says they will eventually be bringing some chip development in-house. They are looking to design semiconductors for improving features such as automated driving capabilities and battery systems for electric vehicles.

Similarly, GM said it was building relationships with big name semiconductors manufacturers like QUALCOMM, Inc. and NXP Semiconductors. GM says they currently have an agreement in place to co-develop and manufacture computer chips. GM short term desire is to reduce number of unique microprocessors by 95%, through using chips with similar architecture. As part of the lessons learned during the past 18 months, GM desires to sidestep future use and dependency of outsourced key parts.

Intel Corporation’s Chief Executive Pat Gelsinger said that the relationship between the auto industry and the chip industry is symbiotic. During an auto event in September, Gelsinger stated that the industries must play well together as the “automobile becomes a computer with tires.

Will greater domestic chip production become part of our technological future in the U.S.? This will help the auto industry in the long-term, but the short-term problem may be more difficult to resolve. If you are working from home, be advised used car prices are almost 40% higher than 2019. Is it time to rethink the role of your second car?

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Jay Hicks is an author, instructor and consultant. With a special kinship for military personnel, Jay provides guidance on successful civilian career transition and has co-authored “The Transitioning Military Series”. He is the co-founder of Gr8Transitions4U, where advocating the value of hiring military personnel is the key focus. More about Jay and his passion can be found at