• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

Iran just crossed Trump's red line for resuming all-out war as fighting continues to escalate with no end in sight

2

U.S. companies have finally gotten $71 billion in tariff refunds, but they’re using it to offset inflation caused by the Iran war

3

FedEx CEO says we are in the middle of the biggest supply chain shift he’s seen in 35 years: ‘We are the referendum’

1

Iran just crossed Trump's red line for resuming all-out war as fighting continues to escalate with no end in sight

2

U.S. companies have finally gotten $71 billion in tariff refunds, but they’re using it to offset inflation caused by the Iran war

3

FedEx CEO says we are in the middle of the biggest supply chain shift he’s seen in 35 years: ‘We are the referendum’
TechGeneral Motors

The great chip shortage of 2021: Why carmakers and computermakers are scrambling

By
Aaron Pressman
Aaron Pressman
Down Arrow Button Icon
By
Aaron Pressman
Aaron Pressman
Down Arrow Button Icon
February 15, 2021, 10:00 AM ET
Add Fortune on Google for similar content.

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.

The Biden administration, already dealing with a variety of crises, is having to deal with yet another: a chip shortage that has slowed the production of everything from cars to laptops.

Fearful of the impact on jobs and an already slow economy, the White House on Feb. 11 announced plans to help alleviate the problem. But the effort is unlikely to lift chip production anytime soon.

Here’s what’s happening.

Which industries have been affected by the chip shortage?

The auto industry, which uses dozens of chips in every vehicle it produces to control everything from antilock braking systems to infotainment screens, has been the poster child for the shortage. General Motors, for example, said it would close three big factories and reduce production at some others through at least mid-March because of a lack of chips. Ford, Honda, Fiat Chrysler, and Volkswagen have also been hit. “This is an industry-wide issue,” GM CEO Mary Barra said during a recent call with analysts. “We do have mitigation strategies.”

Additionally, Sony says the shortage has hampered its production of new PlayStation 5 gaming consoles, while Nvidia and Advanced Micro Devices blamed a slowdown in graphics card production on the problem.

Meanwhile, Apple and Qualcomm said even more mobile phones could have been sold if they had greater supply.

What’s causing the shortage?

After a few years of tepid demand for most tech gear, the COVID-19 pandemic unexpectedly spurred a huge tech buying spree. Manufacturers of personal computers, laptops, and tablets­—all of which require chips for processing, graphics, and other functions—were caught off guard.

Last year, computer sales exceeded 302 million units, a 13% increase from the year before, and the most since 2014, according to market tracker International Data Corp. At the same time, webcam sales rose almost 360%, a consequence of people working from home wanting to use video conferencing.

Have trade restrictions impacted chip supplies?

Another cause of the shortage is the former Trump administration’s trade battle with China. The war caused many customers to avoid chips from Semiconductor Manufacturing International, or SMIC, a Chinese chip manufacturer that accounts for about 5% of global semiconductor supply, and about 10% of chips that are made with older technology.

In a decision announced last fall, the U.S. Commerce Department declared that SMIC may supply the Chinese military with chips, making it a threat to national security. In December, the federal government restricted SMIC from obtaining some U.S.-regulated chip-making equipment. Buyers cut back orders from SMIC.

Can’t other chipmakers build more factories?

They can—but not easily or quickly. Many companies thought of as chipmakers, including Apple, Qualcomm, and Nvidia, design chips but don’t actually manufacture them. Chip making has become an increasingly consolidated industry because a new chip fabrication factory can cost $10 billion or more. This year, only three companies are manufacturing chips using the most cutting-edge technology: Samsung, Taiwan Semiconductor, and Intel. In February, Samsung filed to build a new $17 billion factory near Austin, Tex., that won’t produce chips for sale for almost three years.

What can the White House do to help alleviate the problem?

President Biden’s plan to sign an executive order addressing the chip shortage lacks details. Furthermore, from the limited information released, it’s clear that the plan will take time to have much impact.

“The review will be focused on identifying the immediate actions we can take, from improving the physical production of those items in the U.S. to working with allies to develop a coordinated response to the weaknesses and bottlenecks that are hurting American workers,” spokeswoman Jen Psaki said.

Lawmakers and some chip companies have been seeking government funds to subsidize building more U.S. manufacturing capacity, but any increased production could take years.

About the Author
By Aaron Pressman
See full bioRight Arrow Button Icon
Add Fortune on Google for similar content.

Latest in Tech

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025

Most Popular

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • Pinterest icon

Latest in Tech

‘Dr. Doom’ Nouriel Roubini says we’re headed for universal basic income or ‘some form of socialism’ as AI revolutionizes work—He calls that optimistic
AIthe future of work
‘Dr. Doom’ Nouriel Roubini says we’re headed for universal basic income or ‘some form of socialism’ as AI revolutionizes work—He calls that optimistic
By Jason MaJuly 18, 2026
6 hours ago
A massive margin call and ‘push-button liquidity’ have torched stocks, but they’re now poised to rebound, top Wall Street forecaster says
Investingtech stocks
A massive margin call and ‘push-button liquidity’ have torched stocks, but they’re now poised to rebound, top Wall Street forecaster says
By Jason MaJuly 18, 2026
11 hours ago
xi
AIChina
A Chinese Pink Floyd fan is giving Claude and Chat their own DeepSeek moment — an AI model just as good and half the price
By Matt O'Brien and The Associated PressJuly 18, 2026
14 hours ago
ives
BankingMarkets
‘I’m an example of what I’ve preached’: Dan Ives knows AI has a ‘PR problem’ but it led to his massive career change after 25 years on Wall Street
By Nick LichtenbergJuly 18, 2026
17 hours ago
pt
PoliticsReligion
Peter Thiel just gave the public its closest look yet at his ‘Antichrist’ theory—and it’s a tech and climate regulator
By Nick LichtenbergJuly 18, 2026
18 hours ago
Svenja Gudell, Chief Economist, Indeed
Commentaryaging
Indeed chief economist: Aging Baby Boomers are America’s real labor problem, not AI
By Svenja GudellJuly 18, 2026
19 hours ago

Most Popular

Iran just crossed Trump's red line for resuming all-out war as fighting continues to escalate with no end in sight
Middle East
Iran just crossed Trump's red line for resuming all-out war as fighting continues to escalate with no end in sight
By Jason MaJuly 18, 2026
9 hours ago
U.S. companies have finally gotten $71 billion in tariff refunds, but they’re using it to offset inflation caused by the Iran war
Economy
U.S. companies have finally gotten $71 billion in tariff refunds, but they’re using it to offset inflation caused by the Iran war
By Sasha RogelbergJuly 17, 2026
2 days ago
FedEx CEO says we are in the middle of the biggest supply chain shift he’s seen in 35 years: ‘We are the referendum’
C-Suite
FedEx CEO says we are in the middle of the biggest supply chain shift he’s seen in 35 years: ‘We are the referendum’
By Fortune EditorsJuly 15, 2026
4 days ago
Indeed chief economist: Aging Baby Boomers are America's real labor problem, not AI
Commentary
Indeed chief economist: Aging Baby Boomers are America's real labor problem, not AI
By Svenja GudellJuly 18, 2026
19 hours ago
Kevin O’Leary claimed opposition to his Utah data center was fueled by Chinese money. Now he and Fox News are being sued for defamation
Law
Kevin O’Leary claimed opposition to his Utah data center was fueled by Chinese money. Now he and Fox News are being sued for defamation
By Marco Quiroz-GutierrezJuly 17, 2026
2 days ago
Peter Thiel just gave the public its closest look yet at his 'Antichrist' theory—and it's a tech and climate regulator
Politics
Peter Thiel just gave the public its closest look yet at his 'Antichrist' theory—and it's a tech and climate regulator
By Nick LichtenbergJuly 18, 2026
18 hours ago

© 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.