The chip shortage began after the coronavirus pandemic hit last year. As global demand for automobiles fell, car companies cut production and their purchases of semiconductors needed to build cars. At the same time, demand for semiconductors soared from companies making computers and other equipment that allowed employees to work from home, according to the Semiconductor Industry Association. Then, when auto production recovered, car companies faced a shortage of semiconductor supplies.
The scarcity has had serious consequences. Ford this month said a lack of chips could cut the company’s production by up to 20 per cent in the first quarter. The automaker was forced to reduce the output of its profitable F-150 pickup at two factories in Michigan and Missouri.