NASHVILLE, TN (WSMV) – Integrated circuits, also known as chips, have seen a massive shortage during the pandemic, leading to production problems for industries like cars and consumer electronics.
Titan Motoring in Nashville does wheels and tires, tinted windows, car wraps, stereo systems and more.
But when they deal with technology they deal with chips.
“One of the big problems at the base is the shortage of semi-conductor chips and that’s processing for just about all the electronics.”
Geoff Kuhn, Titan’s wholesale logistics manager, explains that the more electronics put in cars, the more chips are needed, similar to a computer.
“So because we’re having a shortage of that, we can’t get customers the products that they want,” Kuhn said. “We can’t get, dealers can’t get cars that they want, can’t get those cars to those customers and so we’re kind of seeing some issues on both sides where we’re not having as much work come in.”
Dr. Kimball Bullington, professor of supply chain management at MTSU, describes the shortage as untimely.
“The shortage happened just about the time when new cars were being introduced.”
New car sales plunged over the last three months in the United States despite strong demand, as the shortage of computer chips and other supply chain issues caused shutdowns at auto factories and choked off the supply of vehicles.
He says at the time of the COVID-19 outbreak, automobile companies decided demand would go down and stopped buying the integrated circuits, or chips, with the shutdown of production.
“So all of a sudden they’re out of the market.”
At the same time, demand for consumer electronics spiked and chip makers shifted their focus.
“Which by the way, they make more money on,” said Bullington. “So when it came time for the automobile companies to re-enter the markets, they found the market was very tight.”
A tight market even before the pandemic as chips now go into appliances that didn’t use them before like refrigerators.
“So the sale of new cars went down, people turned to used cars, the used car market got tight.”
Bullington reminds this is not just a supply but demand issue as well and it is affecting prices in a lot of products because they’re scarce which brings increased prices.
“The automobile manufacturers right now seem to be predicting that somewhere in early 2022 to mid-2022 that they’ll be out of this and that may be true,” Bullington explains. “If you talk to the chip manufacturers, well the CEO of Intel says it’s going to be 2023,”
Both Nissan and GM have manufacturing locations in Middle Tennessee but declined interviews for this story.