Does Ford still have a chip shortage?
Not in the depths of the crisis that crippled auto production in 2021–2022, but Ford still experiences periodic chip-related constraints as demand for vehicle semiconductors remains strong.
As supply chains have gradually recovered, Ford has signaled that chip availability has improved and production has become more reliable. Still, the pace of recovery varies by model, region, and the evolving needs of modern vehicles, particularly EVs and vehicles equipped with advanced driver-assistance systems that rely on more powerful semiconductors.
Current state of Ford's semiconductor supply
The latest industry signals suggest the overall semiconductor shortage for autos has eased relative to the peak crisis years. Ford and other automakers have gained more predictable access to many components, helping to stabilize production after prolonged plant shutdowns and idled lines.
Behind the improved headlines are several moving parts. While inventory and lead times for many standard automotive chips have improved, demand for chips used in EVs, ADAS, and other high-tech features remains elevated. Automotive-specific chips can still have longer lead times than pre-pandemic norms, and allocation decisions continue to reflect the growing complexity of Ford's model lineup.
- Global semiconductor supply has regained more normal levels, reducing some of the bottlenecks that slowed production in 2021–2022.
- Automotive-specific chips continue to be in higher demand, which can create localized delays for certain vehicles.
- Ford has benefited from greater supplier diversification and better scheduling, improving resilience across its production network.
- The chip demand tied to EVs and advanced electronics is higher than before, exerting ongoing pressure on wafer capacity.
- Macro factors such as logistics, geopolitical dynamics, and policy developments can still influence availability and pricing of components.
Overall, the improvement in chip availability has reduced the risk of widespread production stoppages, but some specific models and options remain more exposed to chip allocation decisions than others.
Ford's mitigation strategies
To reduce vulnerability to chip shortages, Ford has pursued a multi-pronged approach aimed at stabilising supply and maintaining production momentum.
- Strengthening relationships with multiple chip suppliers to avoid single-vendor dependency and to secure prioritized allocations.
- Building buffer inventories of critical semiconductors and working closely with suppliers to accelerate delivery timing when possible.
- Exploring nearshoring or regional partnerships to shorten lead times and reduce logistics risk.
- Designing platforms and modules that can accommodate a range of chip types, enabling quicker substitutions if a preferred part becomes scarce.
- Coordinating with automaker suppliers on long-term capacity planning and joint development efforts to expand chip production for automotive needs.
These measures aim to keep assembly lines moving and to minimize the impact of sudden shifts in chip availability, particularly for high-demand models and new technologies.
Outlook for 2025 and beyond
Industry outlooks suggest semiconductor supply for autos will continue to improve, but not return to pre-pandemic levels of ease. Ford and other manufacturers will likely see fewer outright production stoppages, though scheduling for certain high-tech vehicles may still be sensitive to chip allocations and supplier dynamics.
Key factors to watch include the pace of capacity expansion among car-specific chipmakers, the rate of EV and ADAS deployment across Ford’s lineup, and ongoing policy developments affecting domestic semiconductor ecosystems and international trade.
What to monitor next includes chip capacity trends, Ford’s supplier contracts and inventory strategies, and any shifts in demand that could alter how chips are allocated across different models and regions.
Summary
Ford is no longer in the acute crisis mode of the early 2020s, but semiconductor shortages have not vanished entirely. The company reports improved chip availability and steadier production, tempered by persistent demand for advanced automotive chips. By diversifying suppliers, building inventories, and designing flexible platforms, Ford is positioning itself to weather ongoing volatility while supporting its EV and high-tech vehicle plans. The trajectory suggests continued improvement, with careful attention to supply-chain dynamics and policy developments shaping the path forward.
When was the last chip shortage?
The last major global chip shortage was from 2020 to 2023, sparked by the COVID-19 pandemic and exacerbated by other supply chain disruptions. While the most severe period has passed, some new chokepoints in the supply chain have emerged, and fears of future shortages persist due to factors like geopolitical tensions and increasing demand for semiconductors.
- Origin: The shortage began in early 2020 due to pandemic-related shutdowns of chip manufacturing plants and a surge in demand for consumer electronics like PCs and gaming consoles for remote work and entertainment.
- Impact: It caused significant disruption across numerous industries, particularly the automotive sector, which experienced production slowdowns and delays.
- Resolution: The crisis began to ease in 2023 as production ramped up and consumer demand for electronics cooled off.
- Current status: Although the most acute phase is over, the semiconductor supply chain continues to be vulnerable to new bottlenecks and geopolitical issues, leading some experts to warn of the possibility of future shortages.
Is the chip shortage still happening?
No, the widespread chip shortage is mostly over, as supply and demand have largely balanced out and lead times for many parts have improved. However, some specific, niche chip shortages or potential disruptions can still occur, such as the recent concerns over a Nexperia chip crisis impacting the automotive industry.
How the situation has improved
- Supply and demand have stabilized: The mismatch between supply and demand that defined the shortage is largely gone.
- Lead times have decreased: It takes less time for common parts to be delivered compared to the peak of the shortage.
- Increased production capacity: New manufacturing capacity is coming online, supported by government incentives like the U.S. CHIPS Act.
- Slowing consumer demand: Demand for some products like PCs and smartphones has slowed, which has helped ease pressure on chip production for those items.
Ongoing challenges
- Specific, localized shortages: Despite the overall improvement, certain types of chips or components may still face supply constraints, as seen with the recent issues involving Nexperia's automotive chips.
- Potential for future disruptions: The global supply chain is complex, and political or other unforeseen events could cause temporary hiccups in the future.
What is Ford doing about the chip shortage?
Ford will partner with American semiconductor manufacturer GlobalFoundries to alleviate short term supply issues, with a co-developed and U.S. manufactured chip a possibility.
Why is Ford discontinuing everything?
Ford discontinued most of its conventional cars because they were low-volume, low-margin, and increasingly unpopular with buyers; reallocating investment to trucks, SUVs, commercial vehicles, performance models and electric vehicles promised higher returns, simpler manufacturing, and clearer brand focus.
