Chip shortage causes GM to extend three vehicle plant shutdowns to more than a month

General Motors said Tuesday it is extending temporary shutdowns at three assembly plants through mid-March because of a shortage of semiconductor chips affecting the global auto industry.

Affected plants are Fairfax in Kansas, CAMI in Canada and San Luis Potosi in Mexico. They produce the Malibu sedan and Buick Encore, Cadillac XT4, GMC Terrain and Chevy Equinox and Trax crossover.

GM said it would make up lost production as much as possible and in some cases it will build vehicles without certain chip modules, then complete them as soon as possible. The shutdowns were supposed to last through this week, but will continue and be reassessed in mid-March, GM said in a short statement.

RELATED: GM says chip shortage will shutter three plants for at least a week, with a fourth at half

The company said the shutdowns “do not change the strong underlying performance of the company, our growth agenda or our commitment to an all-electric vehicle.”

 GM plans to use every available chip to build and ship its most popular and in-demand vehicles, including full-size trucks, SUVs and Corvettes.

Ford cut production this week of its popular  F-150 pickup model due to the chip shortage. Unlike GM, Ford said last week that the shortage could lower its earnings in 2021 by up to $2.5 billion.

 The semi supply situation is changing constantly, Ford said, but added that estimates from suppliers suggest loss of 10% to 20% of Ford’s planned first quarter production.

The cause of the shortage stems from the pandemic last spring when car assembly plants shut down around the globe and orders for chips plummeted. When sales of cars and demand for chips suddenly spiked in the fourth quarter, chipmakers were already committed to other jobs for chips going into PCs and servers, among other devices.  It can take four months for a chip order to result in a finished product ready to be installed in a vehicle.

Several chipmakers devoted to automakers said in recent earnings calls that they are slowly pulling out of the supply crunch, although some analysts believe it will take until June to catch up on a broad basis.  On the other hand, Texas Instruments, one of the biggest auto chip suppliers said it had built up a buffer of auto chips, enough to meet demand.

RELATED: TI reports blowout fourth quarter driven by auto, industrial demand

Infineon Technologies AG said its auto chip revenues soared by 40% in the first fiscal quarter that ended December 31. Auto chips make up 44% of Infineon’s revenues, which reached about $3.1 billion for the quarter.

Infineon CEO Reinhard Ploss said there will be “speed bumps in the near term” for chip shortages, but added that current supply constraints “should not overshadow underlying trends.2021 is sharping up to be a strong year for automotive semiconductors.”

RELATED: Infineon bets on strong EV growth after 40% auto chip revenue climb last quarter