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When Will U.S. Autos Recover From the Chip Shortage?

We think the worst of the damage was in the second quarter.

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Just as the United States seemed to be rebounding from the pandemic, its auto industry got hit with another major setback: a massive shortage of semiconductors. We believe this problem is the result of the pandemic as well as the automakers probably not anticipating such a fast recovery last year. A fire at a chip plant in Japan and Texas winter storms have not helped, either. More capacity is coming but will not be on line until well after this year. The lead time from a wafer firm to an automaker’s assembly plant is just over six months, so the second quarter saw severe pain in lost production, resulting in severely low vehicle inventories.

David Whiston does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.