Ford, Nissan Pause Car Production Because of Material Shortage

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Car manufacturers Ford and Nissan have trimmed their production of certain vehicles because of a semiconductor shortage. Semiconductors, also known as chips, are important components of modern vehicles responsible for features like Bluetooth connectivity, infotainment systems, and easier vehicle steering. An average vehicle requires around 50 to 150 chips. Automakers and semiconductor manufacturers first warned about a semiconductor shortage last year when the demand for vehicles exceeded the supply. The situation worsened when some semiconductor production factories closed due to the pandemic. The need for chips amid the very low supply also increased when people began to work and study from home because of the high demand for more laptops and other electronic devices. To address the shortage, Ford idled its vehicle plant in Kentucky for one week. The factory paused production of the Ford Escape and Lincoln Corsair vehicles, and its facility’s approximately 3,800 workers received about 75% of their usual pay during the shutdown. Nissan, in contrast, chose to simply reduce production in its Oppama Plant in Japan. The company said that it was coordinating with its suppliers to monitor any impacts of the shortage on its operations in North America. Experts are hopeful that the semiconductor suppliers will catch up to the demand. Automotive research expert Alan Baum said that until they do, automakers will have to save their chips for their more profitable vehicles. This is in line with Ford's decision to temporarily halt production of the Ford Escape, which is not profitable at the moment, Baum explained. He warned, though, that car companies will be in a jam if the shortage begins to affect the production of their high-profit models.