General Motors is the latest company to warn on the chip shortage, noting it could reduce its full year earnings by up to $2 billion.
In fact, according to Reuters:
“GM extended production cuts at three North American plants and said it would partially build and later finish assembling vehicles at two other factories due to the chip shortage. GM expects the shortage to trim $1.5 billion to $2 billion from its 2021 operating profit.”
General Motors now joins Ford, Enphase Energy, and Sony in warning of the supply squeeze.
After all, according to Zacks, “Microchips are an integral part of both the auto industry as well as the infotainment industry. As people remained locked up in their homes during the pandemic, demand for consumer electronic goods shot up, thus driving sales of microchips. This saw demand for microchips growing and resulting in a shortage of supply.”
At the same time, while some companies are struggling, semiconductor stocks should shine here. All thanks to increased demand, low supply, and pricing power. With this issue, investors may want to keep an eye on stocks, like Maxim Integrated (MXIM), Micron Technology (MU), NXP Semiconductors (NXPI), Taiwan Semiconductor (TSM), and NVIDIA (NVDA).