I’m assuming the Pandemic and supply issues are to blame?
Really down to a lot of factors coming together at once. The pandemic is a little to blame in terms of driving massive demand for computers and home entertainment last year, but that spike has mostly passed. Consumer demand is strong because the economy is strong, but that isn’t really what’s driving it.
Bigger reasons are the fire at the Renesas plant in Japan back in March. Thanks to manufacturing’s hyper reliance on JIT (Just In Time) inventory and supplier consolidation to force down prices, this single plant makes 60+% of the chips used in the auto industry. And the auto industry loves zero inventory and JIT, so the automakers and other manufacturers had no stock of chips to fall back on.
Really this whole shortage comes down to decades of manufacturing moving to JIT inventory and supplier consolidation for efficiency and to hammer down costs. This has created a supply chain that has no resilience. The minute something goes wrong, the situation is bad. If two things go wrong, the situation is dire. There is no slack in the chain.
There is also a huge drought in Asia that is crippling chip production in several key areas. Water use restrictions have stalled chip production (which uses a lot of water) and some factories are limited to working only a few days a week because that’s all their water permits will allow.
Neither of these situations is going to end soon. Order backlogs for the supply of chips that are available are massive and growing every day.
Ford is completely shut down on the F150 production, which is Ford’s best-selling vehicle and this is entirely due to the chip shortage. Ford hasn’t idled consumer production on this scale since WW2. That’s how bad the situaiton is.