The chip deficit will eat $ 110 billion in carmaker's revenue

The consulting firm, Alex Partners, said that the global deficit in semiconductor chips will cause the automakers to lose revenue of $ 110 billion this year, up from a previous estimate of $ 61 billion, as it expects the crisis to affect the production of 3.9 million cars.

The company said on Friday that the chip crisis underscores the need for automakers to be "proactive" at present, and to create "resilience in supply chains" over a longer term to avoid disruptions in the future.

In the past, automakers had entered into direct supply agreements with producers of specific raw materials, including precious metals such as palladium and platinum, which are used in exhaust purification systems ... and the more direct approach to obtaining supplies of precious metals began to be adopted after disruptions regarding supply and price in those market.

The crisis has been exacerbated by the epidemic-related production cuts, the fire at a semiconductor plant in Japan, and the historic sudden cold snap that last winter in Texas. "There are up to 1,400 chips in the concept car today, and this number will increase," said Dan Hirsch, managing director of auto practice at Alex Partners, adding that "the top priority for companies at the moment is to mitigate as much as possible the short-term effects of this." Turmoil, which may include everything from renegotiating contracts to managing the expectations of lenders and investors ».

Mark Wakefield, co-chair of the global automotive division at Alex Partners, said carmakers were now looking to have direct relationships with semiconductor makers. He added, "These matters appeared suddenly."

Wakefield said that in the past, car manufacturers were reluctant to make long-term commitments to purchase semiconductors or other raw materials, and to shoulder the financial liabilities associated with such agreements.

For the time being, he added, "the danger is real."

It is not a potential risk »in terms of production loss due to a semiconductor deficit.

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