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Illustration: Aïda Amer/Axios

A global chip shortage has forced virtually every major automaker to halt some car production and furlough workers — just as the industry was showing signs of recovery from the pandemic-related shutdowns last spring.

Why it matters: Fewer chips, fewer cars. Semiconductors are crucial components that make computer-controlled systems in cars work — everything from engines to power windows, as well as driver-assistance and navigation features.

What's going on: Automakers needed fewer chips when the pandemic forced them to halt production. Chipmakers curbed production then ramped back up, though they still can't meet the industry's abrupt demand rebound.

  • Not helping: A tension long in the making. Chip appetite from the tech industry has been surging. But it skyrocketed when the pandemic supercharged appetite for electronics that need chips to operate.

The list of chip shortage victims keeps growing: Ford is the latest, slashing production of its top money-making F-150 pickup trucks because of the limited supply of the key auto component.

  • The company is bracing for a big hit: “Right now, estimates from [chip] suppliers could suggest losing 10% to 20% of our planned first-quarter production," Ford CFO John Lawler said yesterday. That could translate into lost profits of $1 billion to $2.5 billion for 2021, he said.

The company joins General Motors, Nissan, Volkswagen, Toyota, Mazda and Subaru in cutting production output — all citing the semiconductor shortage.

By the numbers: The problem will result in nearly 700,000 fewer vehicles produced globally this quarter alone, according to new research from IHS Markit. It also said the problem might not let up until Q3.

  • Alix Partners says the lost revenue could be as much as $61 billion this year, per Bloomberg.

Between the lines: Major semiconductor suppliers, such as Taiwan-based Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) say they are investing to expand production, but that will take time.

  • The problem has caught Washington's attention, with more than a dozen senators calling on the White House to support additional funding to expand chip production in the U.S.

The bottom line: "Automakers cutting production now because of a chip supply bottleneck will cause a cascade of issues throughout the supply chain," Sam Abuelsamid, an analyst at Guidehouse Insights, tells Axios.

  • "Not only will the automakers be cutting production, so will all of their suppliers. This will be very costly throughout the industry."

Go deeper: Why Intel's chip troubles should concern us all

Go deeper

Mike Allen, author of AM
24 mins ago - Politics & Policy

Biden adviser Cedric Richmond sees first-term progress on reparations

Illustration: "Axios on HBO"

White House senior adviser Cedric Richmond told "Axios on HBO" that it's "doable" for President Biden to make first-term progress on breaking down barriers for people of color, while Congress studies reparations for slavery.

Why it matters: Biden said on the campaign trail that he supports creation of a commission to study and develop proposals for reparations — direct payments for African-Americans.

Cyber CEO: Next war will hit regular Americans online

Any future real-world conflict between the United States and an adversary like China or Russia will have direct impacts on regular Americans because of the risk of cyber attack, Kevin Mandia, CEO of cybersecurity company FireEye, tells "Axios on HBO."

What they're saying: "The next conflict where the gloves come off in cyber, the American citizen will be dragged into it, whether they want to be or not. Period."

Cedric Richmond: We won't wait on GOP for "insufficient" stimulus

Top Biden adviser Cedric Richmond told "Axios on HBO" the White House believes it has bipartisan support for a stimulus bill outside the Beltway.

  • "If our choice is to wait and go bipartisan with an insufficient package, we are not going to do that."

The big picture: The bill will likely undergo an overhaul in the Senate after House Democrats narrowly passed a stimulus bill this weekend, reports Axios' Kadia Goba.