It is difficult to overstate the challenges the semiconductor shortage is causing for companies in almost every industry—especially automotive. Case in point, GM announced last week that its third quarter sales would decline 32.8% year on year. “The chip shortage has caused GM to shutter plants for weeks, if not months, and also partially produce vehicles that are in high demand such as its full-size pickup trucks to then finish when chips become available,” wrote CNBC on Friday.
With few exceptions, industry analysts and supply chain experts forecast that the shortage will last past 2022. “We’re not seeing an end in sight and certainly expect it to continue into 2023,” said Resilinc CEO Bindiya Vakil in a recent interview on Bloomberg’s Balance of Power (her interview starts at 13:45). “Companies that are entirely dependent on semiconductors will see some levels of allocations and constraints essentially for the long term.”
When asked by Bloomberg Anchor David Westin whether federal efforts to bolster semiconductor supply chains will make a difference, Vakil responded: “Quite frankly the situation has been building for a long time, so there are no near-term [solutions]. It will take several years to build up semiconductor capacity to where it needs to be.”
On top of the semiconductor shortages, shipping congestion and port disruptions portend a chaotic holiday shopping season. “Consider ordering your year-end gifts now,” wrote C-Net’s senior writer Laura Hautala last week. And that may not be soon enough. Hawaii Foreign Trade Zone’s Trade News Weekly reported last week that Chinese ports are experiencing congestion even more severe than U.S. West Coast ports: currently 152 ships are waiting to unload outside the ports of Shanghai and Ninbo; across the entire country there is a backlog of 242 ships.
“It’s a perfect storm right now,” summarized Vakil. “In every area you can think of, you find some level of disruption. [Manufacturers and retailers] are trying to buy and store as much as they can, and the supply chain simply doesn’t scale up like that. We also have rail car issues, truck driver shortages.”
When asked on Balance of Power whether accurate and updated supply chain information could help companies better manage disruptions, Vakil replied that this is Resilinc’s core mission. “We’ve been working in the area of supply chain transparency for more than a decade [but] there’s still so much work to be done. Many supply chain partners simply are not transparent [and] not willing to share information about where they build the parts that companies buy from them and who their suppliers are,” she said. “In semiconductors this is an especially a big issue because there are so many smaller players.”
