Semiconductors are essential when building next-generation vehicles because they are used in sensors and controllers. The cars cannot be built without them.

How small are semiconductor chips? They are on a nanoscale, which means they are incredibly small. The prefix “nano” means 10-9. Therefore, a nanometer is one-billionth of a meter. Semiconductors are 0.05 as big as human hair, and according to nano.gov, human hair is 80,000-100,000 nanometers wide.

These numbers are hard to relate to. An article for Forbes by Jim Handy, published Dec. 14, 2011, makes it easier. He said the ratio between a nanometer and a hair’s width is similar to the ratio between an inch and a mile.

One surprising consequence of the pandemic and climate change has been the semiconductor chip shortage that began around February 2021 but was initially caused by the pandemic shutdown of March 2020.

The pandemic caused an increased demand for electronics as people set up home offices and spent more leisure time at home, too. They bought computer components, home entertainment devices and video game consoles. That set up a competition for chips between the auto industry and the electronics industry.

Renesas Electronics Corporation, a Japanese company that manufacturers semiconductors, had a fire at a key plant. Two notable customers who were affected by the fire include Ford Motor Company and Mitsubishi.

A water shortage in Taiwan slowed chip production. Aquifers there are low because there were no typhoons in 2020, and the rainfall between January and the end of March was half of what Taiwan usually gets. According to the South China Morning Post, the water shortage in Taiwan could cause the chip shortage to continue until 2022.

Some manufacturers were better prepared than others when the shortage began. Six Japanese carmakers, including Toyota, Honda, Nissan, and Mitsubishi, have learned from previous disruptions to stockpile important parts such as chips. Their policies allowed them to continue building cars temporarily; in contrast, U.S. manufacturers had to stop sooner.

Most semiconductor chips (more than 80%) are built in Asia. Only 12% are made in the U.S. That’s part of the reason why the chip shortage has been a problem. But manufacturing them in the U.S. is not a simple issue. Chips are made from sand. They are small and difficult to build, and one chip can have billions of semiconductors on it. The process takes three months, and the factories to build them have completely dust-free rooms: a single speck can damage a chip, making it worthless. The machines to build the chip transistors cost millions; the process also includes lasers, molten tin and water.

Intel would like to build two new chip factories in Arizona with a starting budget of $20 billion. If it can get public financing, Intel would also like to build a chip factory in Europe.

Different automakers have responded to the shortage in different ways. In addition to the obvious solution of securing more chip supplies, most manufacturers have had times when they temporarily stopped building cars and reduced their production schedules. In February 2021, Elon Musk closed a Tesla plant in California because it didn’t have enough electronic components. In April 2021, other manufacturers cut back on their plans, including the following:

• Ford shut down four plants in the U.S. and one plant in Canada.
• General Motors halted production at several factories, including Tennessee, Michigan and Mexico.
• GM Korea stopped building automobiles at two Incheon plants. (In March, it dropped a plant in Bupyeong to 50% capacity.).
• Mitsubishi built 16,000 fewer cars overall because of the shortage. Of that total, 7,500 would have been built in Japan and Thailand.
• Subaru decided not to build 10,000 vehicles at a Japanese plant.