Although the semiconductor shortage peaked during the second quarter of 2021, Ford says it delivered better-than-expected operating results by tapping into strong demand for new vehicles, such as its Bronco SUV, according to its most recent earnings report.
In April, Ford expected to lose about 50% of its planned production for the second quarter, resulting in a loss of earnings for the period. However, the automaker was able to generate adjusted company-wide earnings before interest and taxes of $ 1.1 billion, according to the report.
With demand for the Mustang Mach-E, which CEO Jim Farley said is already profitable in Wednesday’s earnings call, and other Ford vehicles were up 7 times from last year, Farley said “the business is’ loaded with spring ‘for a rebound when semiconductor supplies stabilize and more closely match demand, “according to a statement issued by Ford.
Going forward, the company said it “has raised its full-year adjusted free cash flow target to between $ 4 billion and $ 5 billion, supported by favorable working capital expected for the second half as that increases vehicle production with an anticipated improvement in semiconductor availability. “
Outwardly, Ford appears to be optimistic, but when pressed during the call, Farley was a bit more cautious and realistic.
“We see the chip issue running this year and we could see it bleeding into the early part of next year,” he said. “We have had conversations with the FAB suppliers. They tell us that they are reallocating capital, that they are increasing the supply for the automotive industry, etc. But I think this is one of those things that we need to see relief in before we can really feel comfortable that we’re out of the woods here. “
Farley said the industry is seeing signs of improvement in chip flow now in the third quarter, but “the situation remains fluid.”
Is not wrong. Semiconductor sales in May increased 4.1% compared to April, which saw a sales increase of 1.9% compared to March 2021, according to the Semiconductor Industry Association. In addition, a World semiconductor trade statistics report published in June forecasts that global annual sales will rise 19.7% in 2021 and 8.8% in 2022. Earlier this month, Taiwan Semiconductor Manufacturing Company said it expects the shortage of semiconductors in the manufacturing space to ease. Reduce considerably starting this quarter due to your increased production efforts. The company said it already increased production of microcontroller units by 30% year-on-year in the first half of the year and intends to take it to more than 30% from pre-pandemic levels of 2018.
Sounds promising, but not everyone is on the same page here. Singapore-based Flex, a global chipmaker, recently warned that the global shortage of chips would last until mid-2022, exacerbated by increased demand for cars, especially electric ones, as well as pandemic-induced purchases of video game consoles, tablets, laptops and other electronic entertainment devices.
Just as Ford is trying to reduce battery supply anxiety by becoming the manufacturer through battery cell partnerships with SK Innovation, Farley said Ford is also working closely with semiconductor manufacturers and suppliers to help them with projections. future of how many chips you expect to need.
TO big reason why there is a shortage of semiconductors It’s because automakers cut their orders when the pandemic caused sales to drop last spring. But by the time the third quarter of 2020 rolled around and demand for passenger cars rebounded, there was already talk of chipmakers, which were filling customer orders for consumer electronics and IT.
In Ford’s defense, it is not easy to predict a pandemic and how many chips it would take for that. Hopefully this doesn’t lead to a hoarding scenario like the Great Toilet Paper Crisis of 2020.