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A Year of Poor Planning Led to Carmakers’ Massive Chip Shortage

  • Auto-chip buyers cut orders too deeply last year on virus woes
  • Car companies pleading for help from Taiwan’s government
car dealership germany
Photographer: Guenter Schiffmann/Bloomberg

Near-sighted planning, supply-chain complexities and a tradition of keeping inventories low caused the semiconductor shortage that is now forcing carmakers to idle production lines and straining their relationship with chip manufacturers.

Seeds of the imbroglio were sown almost a year ago as the virus outbreak led to plunging car demand, prompting auto-chip companies to slash orders. But when they wanted to increase supply toward the end of 2020, they struggled to secure capacity at Taiwan Semiconductor Manufacturing Co. and other contract chipmakers that were busy servicing a boom in demand for gadgets that help housebound consumers stay connected, according to people familiar with the situation.