Bloomberg quoted the CEO of Intel (Pat Gelsinger) as saying that the chip shortage, which is afflicting everything from cheap disposable toys to full-size pickup trucks, is here to stay for at least the next two years.

In addition to the Texas freeze, which destroyed both parts in progress and the machines which make them—not expected to be replaced until June or July—COVID depressed global production of semiconductors, even as demand skyrocketed. Sales of tablets, desktops, laptops, and webcams spiked as people had to work or learn from home; and automakers’ competition for autonomous cars and standard safety and telematics features increased as customer expectations rose.

While new fabrication facilities are being built, they take quite a long time to come together. What’s more, most of production is now centered in Asia, for reasons ranging from an extremely large supply of manufacturing engineers in China to extremely low labor rates to easier environmental rules. Only 12% of the world’s semiconductors are made in the U.S., according to Gelsinger, as quoted by Bloomberg.

Ford has cut 1.1 million vehicles, and GM is said to be affected even more; Peugeot has started using less complex instrument clusters in some cars to work around the shortage. Nearly every automaker is cutting production, and because chips are not interchangeable between cars, production is sometimes afflicting vehicles with higher profit margins (indeed, higher-end cars are likely to need a wider range of digital controls). Long supply chains delayed the outages until recently, which means that once supply of the most basic parts (e.g. capacitors) comes back, it will take some time for auto lines to reach full capacity again. Toyota and Apple, which excel in their supply chain work, are likely to be less impacted than other companies.

Some have started rumors that the government is somehow involved in creating the crisis, but if so, it would have more power than one would think, since the shortage is affecting computers and cellphones as well, and since so little production is in the United States.

In all, new car supplies will likely be constrained through at least the end of the year, and quite probably less severely constrained for another year after; used cars are likely to command unusually high prices during this time.

Main source: Intel CEO says chip shortage will persist for ‘couple of years’