The Global Chip Shortage's Newest Target Is Automakers

1 min 57 sec read
September 23, 2021
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You might be asking yourself, "Why is WebFindYou covering the auto industry? As a reminder, our 3 Minute Digital Digest covers all things digital and microchips are a part of our digital world.

So did you know that there's a massive shortage of computer chips? The sad part is, it's only going to get worse before it gets better. So here's the state of the chip shortage today and its widespread effect across many verticals.

Men Fighting Over Microchip as Chip Shortage Cuts Supply Chain Short for Automakers
The chip shortage is expected to cost the auto industry $210 billion in revenue in 2021, hurting the production of heavy-duty trucks and personal vehicles.

It was like the perfect storm occurred. The pandemic forced manufacturing plants to go into lockdown in many parts of Asia and also forced people indoors worldwide. It then slowed down production affecting all industries, especially chipmakers and tech industries alike.

We bought and relied on many electronic devices during the lockdowns to do virtually everything since physical interactions were out of the question.

Working remotely meant an increase in the production of computers, smartphones, servers and for entertainment, it meant more gaming consoles, TVs, etc. Let's be honest, we were totally bored in 2020 and relied on tech heavily.

So production for electronics soared and tried to match, if not exceed, the demand for consumer products. And we usually think of microchips being used for our iPhones or PCs, and you're probably wondering, "How does this relate to the automotive industry?"

Well for a while now, vehicles have had computers in them, some have internet, most have Bluetooth and entertainment systems, and many car parts use semiconductors.

Since more consumer electronics were being made, at least 25 different car models have lost at least 10,000 units of production due to chip shortages this year.

Automakers are not only suffering at the production level but the chip shortage is driving auto advertisements off the road, so to speak.

VP and General Manager of Polk Automotive Solution, Joe Kyirakoza says, "... what we're starting to see is a smaller erosion of loyalty…" and "If you stop marketing to your consumers, you're creating risk for your business in losing customers," he says.

Automakers don't want to risk losing brand loyalty because it may be hard to win those customers back. To save on traditional ad spend, don't be surprised to see more automakers pushing more digital marketing strategies to maintain brand loyalty online.

Look, things may be bad for automakers. Still, for all things digital that use a chip, this shortage may have a negative global impact across all industries.

Our PCs, smartphones, home appliances, IT infrastructures, data centers, and anything with a chip in it may be affected due to the shortage. President Biden is considering using the Defense Production Act to address the semiconductor shortage.

We hope that global leaders can work together to alleviate the chip shortage and end the chip-making war. Only time will tell.
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