Amid Semiconductor Shortage, Auto Industry Seeks Aid from White House’s $37 Million Proposal to Bolster Production

In early 2020, as the COVID-19 pandemic began to shut down wide swaths of the global economy, automakers braced for the worst — a downturn far steeper than even the Great Recession.

Sales did tumble initially, but the latter half of the year saw a strong recovery. Circumstances, however, nonetheless conspired to once again force the U.S. auto sector to ask Washington for help.

Industry group the Alliance for Auto Innovation (AAI), according to Reuters, called for part of billions in proposed aid for semiconductor manufacturing to be reserved for its members.

As the pandemic closed vehicle plants and sent demand for electronics soaring last spring, the world’s semiconductor makers diverted their chips to the latter segment — resulting in the ongoing shortage of chips for vehicles. The AAI, responding to a government review, said the shortage could disrupt production for another six months and lead to nearly 1.3 fewer vehicles being produced this year.

The White House has proposed $37 million to bolster chip manufacturing, and the AAI recommended that a “particular percentage” of the new capacity be dedicated to “auto-grade chips” based on industry’s “projected needs.”

Although the new capacity could help secure the automotive supply chain in future crises, it appears unlikely to bring much-needed help anytime soon: chips have months-long lead times, and automakers continue to cut production in the meantime. Just last week, Ford indicated it would slow or idle operations at several North American plants due to the shortage.

[To learn more about the recent industrial sourcing surge for printed circuit boards (PCBs), check out the recent Thomas Index Report video "Global Printed Circuit Board Supply Shortages Causing Widespread Manufacturing Delays in Automotive, Electronics Sectors.”]