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The Wall Street Journal: Global chip shortage plaguing auto makers expected to worsen

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Global auto makers who had expected the semiconductor supply crisis to subside in the spring are now warning that chips will remain scarce for months while a second-half recovery is fraught with uncertainty.

The main causes of the worsening shortage are the widespread chip manufacturing disruption in Texas from the severe weather in February and a fire at Japan’s Renesas Semiconductor Manufacturing Co. Ltd. on March 19 that halted production, ripping a hole in the global supply. That has left car makers searching for chips needed for on-board electronics, safety systems such as automatic braking, and infotainment consoles.

The disruptions in Texas and Japan have exacerbated a shortage that began last year when strong demand from the consumer-electronics industry left car makers unable to accelerate chip orders to keep pace with a stronger-than-expected post-lockdown rebound in auto sales. Car makers had to stall or stop production and ration chips for the best-earning models.

See also: Ford’s ‘massive’ first-quarter beat overshadowed by chip-shortage headwinds

“The semiconductor shortage and the impact to production will get worse before it gets better,” Ford
F,
-8.29%

Chief Executive Jim Farley said Wednesday. “Our second quarter will be the trough for this year.”

An expanded version of this article appears on WSJ.com.

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