GM Chief Sees Chip Supplies Stabilizing but Below ‘Volume That We Really Need’

General Motors CEO Mark Reuss attends an event in New York on May 20, 2019. Nicholas Hunt/Getty Images

General Motors President Mark Reuss said Tuesday that he expects the global supply of semiconductors to stabilize but at lower levels than automakers need to rebuild their inventories.

Reuss made the remarks at a conference hosted by the Detroit Regional Chamber in Michigan on Sept. 21, where he discussed GM’s plans for battery-powered car and truck production, and revealed three new motors that will power its upcoming electric vehicles.

“We’ve got an inventory hole that then got exacerbated by the chip shortage,” Reuss said, remarking on the pandemic impact on the auto industry.

Automobiles have become increasingly dependent on semiconductors for everything from safety features such as airbag deployment and emergency braking assistance to computer management of engines for better fuel economy and performance.

“Are we going to be at stable inventories where we have what we want on a day supply basis across the industry and at dealerships? The answer is no, because there’s two holes—there’s the chip hole, there’s the pandemic hole, and when you look at that thing across all of the industry, it’s pretty tough” he said.

Reuss said he thinks getting enough chips to resume production at plants facing shutdowns will come “before an industry stabilization of supply to meet the demand.”

“We’re going to see a stabilization to some extent before we see getting the volume that we really need,” Reuss added.

The chip crisis has led to production cuts by automakers around the world.

GM said several weeks ago it was cutting production at six North American assembly plants due to the shortage and, earlier this month, the company was forced to temporarily halt production at most North American assembly plants because of the chip crunch.

The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Mich., on March 16, 2021. Rebecca Cook/Reuters

Chrysler parent Stellantis NV said last week it was cutting additional production at three plants in the United States and Canada because of the shortage, while Ford announced in late August that it would temporarily shut its Kansas City assembly plant, which builds its best-selling F-150 pickup truck.

The pandemic-driven parts crunch forced Toyota to cut production by 40 percent in assembly plants in Japan and by as much as 60 percent in North America, while German car manufacturer Volkswagen said in late August that the chip shortage could force it to slow production in the fall.

The spread of COVID-19, the disease caused by the CCP (Chinese Communist Party) virus, has disrupted semiconductor manufacturing, with carmakers now facing stiff competition from the sprawling consumer electronics industry for the reduced supply of chips.

While the United States remains the global leader in chip design, roughly 80 percent of semiconductor foundries and assembly and test operations are concentrated in Asia.

Washington has recognized the vulnerability of foreign semiconductor supply chain reliance, with Commerce Secretary Gina Raimondo calling the lack of chip production in the United States a “national security risk.”

President Joe Biden has called for increased investment to revitalize U.S. chip manufacturing, while bipartisan efforts on Capitol Hill have sought to bolster domestic semiconductor supply chains by incentivizing manufacturing in the United States.

Raimondo and White House economic adviser Brian Deese will host a semiconductor supply chain meeting at the White House on Sept. 23. Officials at the meeting—which will include producers, consumers, and industry groups—will discuss the global chip shortage and the impact of the pandemic on semiconductor supply chains.