What’s the Deal with the Chip Shortage?

A global chip shortage has dominated national headlines over the last few months. Global microchip production is much lower than demand, meaning that many large manufacturers are having difficulty meeting their production quotas. While most technology available today uses these semiconductor chips, car manufacturers have been hit particularly hard by the crisis. The chip shortage has caused American car manufacturers to drastically lower their output and car dealers around the country to sit with empty lots.

All of this complicated information leaves customers with many questions. Why are the microchips important? What is causing the shortage? How does the shortage affect Hyundai? We’re here to answer all of your questions and bring you the latest information on the great microchip shortage.

Why is the microchip important?
Microchips power just about every piece of technology we use today. Whether it’s in a computer, a phone, a coffee machine or a car, microchips make the world go around. While these microchips have been important pieces of vehicle technology for decades, they have become even more important in recent years as the sheer amount of vehicle technology has increased.

What caused the chip shortage?
To oversimplify things, the COVID-19 pandemic is at the root of the microchip semiconductor shortage. When people began to work from home, demand for consumer electronics skyrocketed. People needed computers, tablets, smartphones and other electronic devices more than ever before. Moreover, large computing services such as Amazon saw an increased need for semiconductors as they expanded their web hosting services. Supply has not increased with demand for more microchips, meaning there is a shortage of microchips available to manufacturers.

There is still a more specific reason as to why the microchip shortage has such a negative impact upon automobile manufacturers. At the same time that semiconductor demand skyrocketed, the many car manufacturers cancelled orders across the supply chain. The microchip manufacturers then sold their products to other industries. When demand for automobiles returned to normal levels, car companies were unable to secure adequate semiconductor supply, resulting in the current chip shortage.

How does the chip shortage affect Hyundai?
Fortunately for our customers at Chris Crain Hyundai, Hyundai has not experienced nearly as many problems with microchips as other automobile manufacturers. Hyundai did not cancel its microchip orders during the height of the pandemic hysteria, and therefore has had enough supply to continue production. In fact, Hyundai has experienced record sales numbers over the past few months as it is able to keep its supply up and prices down in the midst of the crisis. While the company intends to slow production over the next few months to preserve its microchip supply, Hyundai will still be able to outproduce competitors and keep rolling out cars to its dealerships across the country.

Hopefully, you’re now a bit more informed about the chip shortage which car manufacturers are dealing with around the world. While chip manufacturers have plans in place to ramp up their production in the coming months, this is not an issue which will go away quickly. In fact, some predict that the crisis will last a few years.

Tags: computers, industry news, microchips, production
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