The Semiconductor Chip Shortage Takes Aim on Another Big Industry

There’s got to be something in our lives that doesn’t require a computer chip, but these days, that’s getting harder to find.

A global shortage of the critical semiconductor chips used in new vehicles for infotainment systems, power steering and brakes, has already rattled production lines at car companies and squeezed gadget makers. And now, it’s leaving home appliance makers unable to meet demand, according to the president of Whirlpool Corp (WHR) in China.

The U.S.-based company, one of the world’s largest white goods firms, is falling behind on exports to Europe and the United States from China, by as much as 25% on some months, Jason Ai told Reuters in Shanghai:

“It’s a perfect storm. On the one hand we have to satisfy domestic demand for appliances, on the other hand we’re facing an explosion of export orders. As far as chips go, for those of us in China, it was inevitable.”

The company has struggled to secure enough micro-controllers, simple processors that power over half of its products including microwaves, refrigerators, and washing machines.

While the chip shortage has affected a range of high-end suppliers like Qualcomm Inc (QCOM), the problem is most severe for many well-established technologies, for example, power-management chips used in cars.

The chip shortage, which began in late December, was caused in part as automakers miscalculated demand and pandemic-fueled sales of smartphones and laptops surged. It forced carmakers including General Motors (GM) to cut production and increased costs for smartphone makers such as Xiaomi Corp (XIACY).

And with every company that uses chips in its products panic buying to shore up its stockpile, the shortage has blindsided not just Whirlpool but other appliance makers too.

As demand continues to soar and chips remain in limited supply, prices will likely continue to rise, which should eventually show up as inflation in retail stores.

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