Biden team sees chip supply gains, relief soon for automakers

Biden administration officials say they're starting to see signs of relief for the global semiconductor supply shortage, including commitments from manufacturers to make more automotive-grade chips for car companies that have had to idle production.

U.S. Commerce Secretary Gina Raimondo, who has led efforts on chip supply, has brokered a series of meetings between semiconductor manufacturers, their suppliers, and their customers including automakers. Administration officials said the meetings helped ease mistrust between the sides related to the chipmakers' production and allocation and automakers' orders.

The result has been more transparency about production and shipments and a gradual increase in supply for automakers, Raimondo said. The administration has also recently pressed Malaysia and Vietnam to ensure semiconductor plants would be deemed “critical” businesses and maintain some production following COVID outbreaks, officials said.

“You're starting to see some improvements,” Raimondo said, adding that in recent weeks, Ford Motor Co. CEO Jim Farley and General Motors Co. CEO Mary Barra have told her that “they're starting to get a little bit more of what they need” and the situation is “a little bit better.”

A Goldman Sachs analysis last month said the peak impact of the chip shortage was in the second quarter and auto production “should jump in July.” But U.S. automakers continue to struggle with the shortage, estimated to be taking a US$110-billion toll on the industry.

Ford is closing or curtailing output at eight factories this month, including the plant making its new version of the Bronco. Five of GM's North American plants will experience “downtime” due to “semiconductor production adjustments” this month and in August, according to GM spokesman David Barnas. And tens of thousands of new cars remain in lots outside U.S. factories, waiting for the chips that power their onboard computers.