Picture: 123RF/SASHKIN7
Picture: 123RF/SASHKIN7

Sydney —  The global chip shortage is going from bad to worse with carmakers on three continents joining tech giants Apple and Samsung Electronics in flagging production cuts and lost revenue from the crisis.

In quick succession, Honda said it will halt production at three plants in Japan for about five to six days next month; BMW flagged it will pause Mini car production at its Oxford, England, factory for three days; and Ford reduced its full-year earnings forecast due to the debilitating chip shortage, which it now sees extending into next year.

And now, the very companies that benefited from surging demand for phones, laptops and electronics during the pandemic that caused the chip shortage, are starting to feel the pinch. After a blockbuster second quarter, Apple CFO Luca Maestri warned that supply constraints are crimping sales of iPads and Macs, two products that performed especially well during lockdowns. Maestri said this will knock $3bn-$4bn off revenue during the fiscal third quarter.

Samsung, a producer and user of chips, said on Thursday that revenue and profit at its mobile division, which produces its marquee Galaxy smartphones, will slide this quarter due to component shortages and weak demand for flagship models.

The shortfall of critically needed semiconductors has forced the entire car industry to cut output, leaving thin inventories at dealerships just as consumers emerge from Covid-19 lockdowns. In just the past week, Jaguar Land Rover, Volvo Group and Mitsubishi have joined the list of carmakers idling factories. Consultant AlixPartners has said the chip shortage could cost carmakers $61bn in lost sales this year.

“The second quarter is going to be worse for automakers than the first quarter,” said Song Sun-jae, an analyst at Hana Daetoo Securities in Seoul. “The chip-shortage problem could end up lasting longer, maybe into next year.”

Beyond Apple, whose high-specification iPhones and aggressive demands typically place it at the front of the line, deepening chip shortages threaten to dampen a nascent rebound in the entire smartphone market. Worldwide shipments surged an estimated 27% to 347-million devices in the first quarter — aided by a plethora of new models and China’s swift postpandemic recovery — but a shortage of components such as app processors could sap that momentum over the rest of 2021.

“Covid-19 is still a major consideration, but it is no longer the main bottleneck,” Canalys Research Manager Ben Stanton wrote Thursday. “Supply of critical components, such as chipsets, has quickly become a major concern, and will hinder smartphone shipments in the coming quarters.”

At Ford, the shortage will likely reduce production by 1.1-million vehicles this year, John Lawler, the company’s CFO, said.

Tesla CEO Elon Musk this week called the chip shortage a “huge problem”. NXP Semiconductors said it’s expecting supply to be tight all year and warned constraints for the car industry could extend into 2022.

“There are too many uncertainties about when chip supplies will improve, and that’s making it difficult for automakers,” said Lee Han-joon, an analyst at KTB Investment & Securities in Seoul. “For semiconductor makers, the auto industry isn’t really seen as one of their key customers and that’s putting the carmakers in a much tougher position in securing supplies.”

• Bloomberg News. For more articles like this, please visit bloomberg.com

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