Chip shortage crisis to cost automakers $110 billion in revenues in 2021

The global semiconductor chip shortage is going to cost automakers $110 billion in lost revenues in 2021, increasing from a prior estimate of $61 billion, according to consulting firm AlixPartners, as it forecast the crisis will hit the production of 3.9 million automobiles.

The chip crunch has driven home the need for automakers to be “proactive” at this moment, and create “supply-chain resiliency” longer-term to prevent disruptions in the future, the firm said on Friday.

The chip shortage, which has hit automakers worldwide, emerges from a confluence of factors as automakers, which closed plants for two months during the coronavirus pandemic last year, rival against the sprawling consumer electronics industry for chip supplies. A factory fire suffered by Japanese chipmaker Renesas this year is also cited as a reason behind the chip shortage.