Global chip shortage disrupts carmakers and electronics production from 2021

From late 2020 and through 2021, a worldwide shortage of semiconductors disrupted manufacturing across many industries. Carmakers were hit especially hard, and several of them cut shifts, paused assembly lines or built vehicles without some electronic features. Makers of consumer electronics, including phones, laptops and games consoles, also faced delays and limited stock.

Several factors combined. When the Covid-19 pandemic began in 2020, carmakers cut their chip orders expecting weak sales. Demand for laptops, home electronics and other devices then surged as people worked and studied from home, and chip factories shifted capacity towards those customers. When car demand recovered faster than expected, supply could not keep up. Production of advanced chips was also concentrated among a small number of firms, mainly in Taiwan and South Korea, and new factories take years to build.

The episode mattered because it showed how dependent modern products are on a few suppliers. It pushed governments in the United States, Europe and Asia to announce subsidies for domestic chip production, and it set the stage for later debates about who gets scarce chips when demand rises sharply.