U.S. Sanctions on China Backfire, Force GM Factories To Shut Down

Feb. 4 , 2021 (EIRNS)—The U.S. sanctioning of China’s largest semiconductor manufacturer has apparently led to a shortage in the U.S. market, which has forced General Motors to close factories in Fairfax, Kansas; Ingersoll, Ontario, Canada; and San Luis Potosí, Mexico, for a week, beginning on Feb. 8. That same week, GM’s Bupyeong 2 plant in South Korea will operate at half-capacity.

“Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021,” GM spokesman David Barnas told Reuters. “Semiconductor supply for the global auto industry remains very fluid. Our supply chain organization is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM.”

Citing data from IHS Markit, Automotive News reported Feb. 2 that the chip shortage would reduce global automobile production (approximately 62 million vehicles in 2020) by 672,000 vehicles in the first quarter of 2021; data from AutoForecast Solutions indicated the shortage had already resulted in 564,000 fewer vehicles being made and could reduce production in 2021 by a further 964,000.

GM is not the only company suffering shortages. Last week, Ford announced it was cutting two of three shifts at its Chicago factory and was extending a plant closure in Louisville, Kentucky, for another week. Toyota, Volkswagen, Honda, Mercedes-Benz, Audi, Subaru, Nissan, Stellantis, and PSA Group have also been forced to reduce production.

These semiconductors are made in China and Taiwan. U.S. sanctions against China targeted China’s largest semiconductor foundry, the Shanghai-based Semiconductor Manufacturing International Corporation (SMIC), forcing U.S. firms wishing to buy from the partially state-owned Chinese company to first obtain a special license from the U.S. Department of Commerce.