Chipmakers Roll In The Cash As Auto Industry Continues To Feel Shortage Effects

While the auto industry continues to be impacted by a lack of semiconductor chips, the manufacturers that make these chips are seeing huge profit gains from the other industries that have seen an increase in demand for the tech products that use them.

According to a report from market research firm TrendForce, the 10 largest global chip producers reported record revenues for Q1 2021, as reported by CNBC.

These chip producers, also known as foundries, had combined first-quarter revenues of $22.75 billion – an all-time record high, TrendForce’s report indicated.

The news that chip producers are racking up huge profits comes as automakers across the globe are temporarily shutting down plants, reducing production lines, and delaying deliveries due to chip shortages from these same chipmakers.

And it is estimated that chip shortages will cost the auto industry significantly.

GM said it expects the plant shutdowns due to the chip shortage will reduce its operating costs by as much as $1.5 to $2 billion for 2021. Ford has said that it expects the chip shortage to reduce its earnings by about $2.5 billion in 2021.

The chip disruption to the auto industry came as the coronavirus pandemic entered and forced the sector to shut down as nonessential businesses.

With vehicle production stalled, chip foundries diverted chip supplies to tech products as demand increased with people working and requiring more computers and electronic devices to supply these needs.

One of the largest chipmakers, TSMC saw revenues of $12.9 billion in Q1 2021, up 2% from a year earlier, while Samsung saw revenue dip 2% to $4.1 billion for the quarter due to the Texas storms, which caused temporary plant shutdowns, TrendForce reported.

United Microelectronics Corporations revenues spike 5% to $1.6 billion while SMIC revenue grew 15% to $1.1 billion, TrendForce’s report said.

TrendForce expects the top 10 foundries to continue to see a 1 to 3% increase for Q2 2021 - another historical high.

Experts also predict that the chip shortage could last as long as 2023, CNBC reported.