The evident chip shortage and production delays automakers are facing has some re-evaluating their logistics in an effort to revive production to its pre-covid “normal” pace. The CEO of General Motors, Mary Barra, said that they will source semiconductors directly from manufacturers, per Verdict.com.
“We’re building direct relationships with the manufacturers,” said Barra. Previously, General Motors never had to buy chips from manufacturers; it was something suppliers handled. The use of direct relations is sure to provide some transparency through the process and perhaps invite the creation of quick and easy solutions that could benefit more than just the auto industry. Barra mentioned that the chip issue is something that can be fixed but will take time. A GlobalData report warns that the chip shortage could last well into 2022 and beyond. Similarly, GM President Mark Reuss told reporters last week that the global microchip supply will settle below desired levels, which means automakers will still struggle to acquire them in the near future.
Covid-19 has put a damper on the supply chain in general and is responsible for the chip shortage, however, there are other elements that have played a role in prolonging the return to normal production speeds. Weather, politics, and a fire in one of the biggest chip manufacturing plants for the auto industry have amplified things and forced automakers to take action. Chip demand is also at the highest it has ever been around the globe. General Motors newer cars have been said to have more chips than their other vehicles on the market. With the electrification age that we are in, looking at the Rivian R1T, Ford Mustang Mach-E and Ford F-150 Lightning as examples, the auto industry’s demand for chip technology can only be expected to grow in the coming years.
Barra isn’t alone in understanding the importance of the supply chain issue she is faced with. It is not an issue unique to the auto industry. Smartphone and gaming consoles alike have experienced similar slow downs. CEO of GPU maker Nvidia, Jensen Huang, noticed the impact in the auto industry and believes automakers should simplify its supply chain when it comes to chip production and perhaps use fewer but more capable chips.