BUSINESS Global chip crunch may cut auto output by 7.1m cars, Delta variant adds stress


Global chip crunch may cut auto output by 7.1m cars, Delta variant adds stress


19:56, August 20, 2021

A woman walks pass a Toyota car in Tokyo, Japan, August 6, 2020. (Photo: CFP)

The semiconductor shortage may cut global auto production by 7.1 million vehicles in 2021 as the COVID-19 Delta variant adds more risks, London-based market research firm IHS Markit estimated on Thursday.

The pandemic-induced chip shortage has repeatedly halted auto plant operations and prompted them to scale back delivery targets since the end of 2020.

IHS Markit said it expected the stress weighing on the automotive sector to drag into the first half of 2022.

"Q2 2022 may be the point at which we look for the stabilization of supply, with recovery efforts now starting only from H2 2022," wrote Mark Fulthorpe, executive director of global light vehicle forecasting at IHS Markit.

He added that the semiconductor shortage was expected to slash global vehicle output by 6.3 million to 7.1 million units.

The research firm cautioned that even though front-end disruptions caused by a fire at Renesas's Naka facility and a storm in Texas have largely eased, constraints in the back-end process have intensified as the Delta variant has stormed Southeast Asia suppliers.

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