Global chip drought hits Apple, BMW, Ford as crisis takes turn for the worse

Chip Source: Google Images

The global chip shortage is going from bad to worse with automakers on three continents joining tech giants Apple and Samsung Electronics in flagging production cuts and lost revenue from the crisis.

In a dizzying 12-hour stretch, Honda said it will halt production at three plants in Japan; BMW cut shifts at factories in Germany and England; and Ford reduced its full-year earnings forecast due to the scarcity of chips it sees extending into next year. Caterpillar later flagged it may be unable to meet demand for machinery used by the construction and mining industries.

Now, the very companies that benefited from surging demand for phones, laptops and electronics during the pandemic that caused the chip shortage, are feeling the pinch. After a blockbuster second quarter, Apple Chief Financial Officer Luca Maestri warned supply constraints are crimping sales of iPads and Macs, two products that performed especially well during lockdowns. Maestri said this will knock $3 billion to $4 billion off revenue during the fiscal third quarter.

“It’s a fight out there and you have to be in daily contact with your suppliers. You need to make sure that you’re important to them,” Nokia Chief Executive Officer Pekka Lundmark said Thursday on Bloomberg Television. “When there is a shortage in the market, it is things like how important you are in the big picture, how strong your relationships are and how you manage expectations.”

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