Here’s why there’s a global computer chip shortage that is slamming automakers during the pandemic

a car parked in a parking lot: Vauxhall car factory in April 2020. Colin McPherson/Corbis via Getty Images

© Colin McPherson/Corbis via Getty Images
Vauxhall car factory in April 2020. Colin McPherson/Corbis via Getty Images

  • There’s a computer chip shortage accelerated by pandemic-driven disruptions in the supply chain.
  • Automakers rely on chips for tech in their cars, and the likes of Apple need them to power gadgets.
  • With only so many chips to go around, industries are suffering as they struggle to meet demand.
  • Visit the Business section of Insider for more stories.

A group of lawmakers is asking the Biden administration to intervene in what has become a global computer chip shortage.


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“We believe that the incoming administration can continue to play a helpful role in alleviating the worst impacts of the shortage on American workers,” the senators wrote in a letter.

So what’s going on? 

Automakers and consumer electronics companies are vying for computer chips

These chips have become a crucial part of the supply chain.

Car companies like Ford use them to power the modern-day technology in their vehicles – the engine, Bluetooth capabilities, seat systems, collision and blind-spot detection, transmissions, WiFi, and video displays systems all run on the chips.

And the silicon components are what power the high-tech gadgets from companies like Apple that we use every day. The upgraded technology in gaming consoles and 5G smartphones in particular require a lot more power, and therefore rely more on chips than previous generations.

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Since March, when the pandemic set in, consumer demand has surged for vehicles and for devices like smartphones and gaming consoles that people can use for entertainment while stuck at home.

Automakers like General Motors, Toyota, Ford, and Subaru, to name a few, were forced to close factories around the onset of the pandemic. When the factories reopened, customer demand for cars had skyrocketed as people, stimulus checks in hand, jumped at the opportunity for low-interest rates and a way to get around that didn’t involve mass transportation.

Automakers responded by ramping up production to maximum levels, further driving up demand – and…