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Chip Shortage To Cost Automakers $110 Billion

The global semiconductor chip shortage will cost automakers US$110 billion in lost revenues this year, a significant increase from an earlier estimate of $61 billion.

Research by consulting firm AlixPartners forecast the crisis will hit the production of 3.9 million vehicles.

The company said the chip crunch had driven home the need for automakers to be proactive and create supply-chain resiliency to avoid disruptions in the future.

Before the chip crisis automakers had direct supply agreements with producers of raw materials, including precious metals such as palladium and platinum, used in exhaust scrubbing systems.

AlixPartners said in a major change to ensuring supplies, vehicle makers are now looking at developing direct relationships with semiconductor makers.

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