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Chip supply, testing woes to further curb light vehicle production in 2021- IHS Markit By Reuters


© Reuters. FILE PHOTO – Engine casting blocks are used in a wide range of General Motors vehicles, trucks, and crossovers. They move along the assembly line at the GM Romulus Powertrain Plant in Romulus (Michigan, U.S.A., August 21st, 2019). Rebecca Cook

(Reuters) – Semiconductor shortages and the delayed packaging and testing of the chips will cause production of global light vehicles to drop by five million this year, data firm IHS Markit said on Thursday, marking the biggest cut to its outlook in nine months.

IHS stated that its light vehicle production projections were being cut by 6.2% (2021) and 9.3% (2022), respectively due to supply chain issues. This means 75.8 million and 82.6 millions units will be, according to IHS.

IHS reported that packaging (NYSE:) was affected by Malaysia’s government’s early June lockdown. This added to problems within an already limited supply chain.

IHS reported that “our interpretation of Malaysia’s situation, which accounts for 13% of global supply for semiconductors to the automotive industry has grown more pessimistic.”

It will take some time for the two-and-a half-month-old backlog, which has built up since June to clear. This is expected to continue well into 2022.

From General Motors (NYSE-:) to Japan’s Toyota, carmakers have seen their output drop and sales expectations decrease due to a shortage of chip supplies. The problem was made worse by an increase in COVID-19 production at key Asian hubs.

According to IHS, the semiconductor problems have led to a loss of production of 1.44M units and an additional 2.6M units in quarter two.

The quarter’s losses are currently at 3.1million units, almost double the forecast.

“The outlook for Q4 now reflects heightened risk as challenges to the supply chain – primarily semiconductors – remain entrenched.”

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