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Global Chip Shortage Forces Automakers to Reduce Production

After automakers temporarily stopped production during 2020, most of the chips were sold to electronics makers.

A global semiconductor chip shortage has forced a number of renowned automakers to cut back vehicle production.

Volkswagen (VW), Ford, Fiat Chrysler, Toyota, and Nissan are all scaling back or stopping production entirely amid these chip shortages, ABC News reported.

Chip production has been delayed due to pandemic-related factory shutdowns throughout 2020. As these chips are vital to modern-day vehicles, the cars' production process has had to halt or be reduced. 

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Ford is idling one of its SUV factories in Kentucky this week, bringing forward a week of downtime it was meant to give its workers later in the year, mentioned CNBC. Nissan, meanwhile, will reduce production at a plant in Japan. 

Toyota reduced production of its full-size Tundra pickup at a factory in Texas, and Fiat Chrysler has temporarily closed its car factories in Ontario, Canada, and Toluca, Mexico, reported ABC News.

VW announced last month that it was going to reduce production at its China, North America, and Europe factories, as Reuters stated.

Semiconductors are incredibly vital components in new vehicles, as they serve to run infotainment systems, Bluetooth connectivity, and power steering, amongst other uses. These chips are typically made out of silicon and carry out control and memory functions in products — these range from microwaves to computers and smartphones.

Shortages of the chip for car production were brought up during the pandemic last year, as production had to be redirected towards consumer electronics. With more people working remotely, more computers and smartphones, among other electronics, had to be produced quickly, leading to cars being left behind. 

On top of this, because of the pandemic, automakers temporarily shut their factories at different times around the world during 2020, so these chips were being more readily sold to electronics makers. 

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Now that automakers have reopened production lines, there aren't enough chips to go around. 

The major players in semiconductor chips' production include NXP Semiconductor, STMicroelectronics, Infineon Technologies, and more.

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