Alliance for Auto Innovation warns of impact of chip shortage

An auto industry group in the United States has it warned that the shortage in the global semiconductor market is likely to result in 1.28 million fewer vehicles manufactured this year and disrupt production for the coming six months.

In a written response to a government-initiated review, the Alliance for Auto Innovation said the U.S. Commerce Department should allocate a portion of its fund to a proposed bill to to expand production of semiconductors in the United States for the auto sector.

Earlier this year, U.S President Joe Biden ordered several Federal Agencies to address the chip crisis and is seeking $37 billion in funding for legislation to supercharge chip manufacturing in the United States.

Some funding should “be used to build new capacity that will support the auto industry and mitigate the risks to the automotive supply chain evidenced by the current chip shortage,” wrote John Bozzella, the group’s chief executive.

The U.S. government could specify “a particular percentage – that is reasonably based on the projected needs of the auto industry – be allocated for facilities that will support the production of auto grade chips in some manner,” said the group which represents mostly all major automakers with factories in the United States including Volkswagen AG, General Motors Co, Toyota Motor Corp, Ford Motor Co, and Hyundai Motor Co.

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