![\"Semiconductor](\"https:\/\/cdn.equipmentradar.com\/assets\/media\/blog\/images\/ed436064-1795-4953-9edc-b6edc9177c72-600x450.jpg\")
<\/source><\/source><\/picture><\/figure>\n<\/div>\n\n The global semiconductor shortage is a real and growing problem impacting industries from automobiles and airplanes to
\n farm and construction equipment. Over the past few decades, our machines have become “smarter,” which means they require
\n a great amount of electronics and sensors to operate. The increased dependence upon technology exposes the farm and construction
\n equipment supply chains to hiccups in technology supply chains.\n<\/p>\n
\n Semiconductor demand is very sensitive to economic growth. It historically has grown at a multiple of GDP. For instance,
\n if GDP grows by ~3%, then semiconductor demand will grow by much more than 3% (the opposite is true too when the economy contracts).
\n The strong economic recovery over the past year has resulted in higher demand for semiconductors.\n<\/p>\n
\n Global manufacturers unable to procure semiconductor chips are forced to stop production. Three weeks ago, \n Earlier this month \n The rise in used vehicle prices is impacting national statistics and financial markets. US \n It is important to note that the BLS uses adjustments when calculating CPI \u2014 these adjustments often “smooth out” \n All farm and construction equipment manufacturers could face similar \n Many technology analysts have estimated that the shortage will persist for most of 2021, \n Used prices for farm and construction equipment have increased over the past year as a result of higher commodity prices and \n There is no easy solution to the semiconductor shortage. Many industries are competing for the same chips \u2014 automotive, \n We hope the situation will ease in the near future, but for now, it looks like the tight environment will persist for at
\n Ford announced it would cut its second-quarter 2021 production by ~50%<\/a>
\n due to the semiconductor supply challenges.
\n Several other automotive companies have announced similar cuts<\/a>.\n<\/p>\n
\n thedrive.com<\/a>
\n published satellite photos showing thousands of unfinished Ford pickup trucks sitting idle in a lot awaiting
\n missing semiconductor chips. The reduced supply of new vehicles for sale has led to
\n very strong growth in used vehicle prices (up 52% year over year in April<\/a>, as
\n reported by Manheim).\n<\/p>\n
\n Consumer Price Inflation<\/a>
\n reported by the Bureau of Labor Statistics (“BLS”) surprised Wall Street last week when prices
\n rose 4.2% year-over-year, the fastest pace since September 2008. Much of the rise was driven by a 10% year-over-year increase in
\n used vehicle prices (as measured by BLS).\n<\/p>\n
\n changes. The 52% year-over-year gain in used vehicle prices as reported by Manheim is not an apples-to-apples comparison with the
\n BLS numbers. We can expect strong upward pressure on BLS figures over the coming months as it catches up with the Manheim index.\n<\/p>\n![\"Manheim](\"https:\/\/cdn.equipmentradar.com\/assets\/media\/blog\/posts\/R892766\/manheim-index-april-2021.jpg\")
<\/source><\/source><\/picture>Source: Manheim Used Vehicle Index<\/span><\/div>\n
\n downtime challenges if supply chain problems persist. This could result in longer delays for new equipment shipments, as
\n well as higher used equipment prices. Gary Truitt at HooserAgToday.com
\n cited several instances<\/a>
\n of strained supply chains impacting the ag equipment industry today. It’s important to remember that these issues are impacting many industries
\n across the globe, and it is not something the manufacturers have much control over.\n<\/p>\n
\n and it could span much of 2022 as well. New semiconductor manufacturing facilities are expensive and take a long time to build.
\n In February, President Biden signed an
\n executive order<\/a>
\n to prioritize the administration’s focus on resolving the semiconductor supply chain issues.\n<\/p>\n
\n strong economic demand. We could see an incremental step higher over the next twelve months as a result of semiconductor
\n shortages impacting new machinery production, as well as higher input costs (steel, copper, etc).\n<\/p>\n
\n aerospace & defense, off-highway equipment, consumer electronics (computers, TVs, etc), industrial robotics, and more.
\n The panic is resulting in hoarding, which further tights the market.\n<\/p>\n
\n least another year.\n<\/p>\n\n Find Similar Articles By Topic
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\n <\/a><\/p>\n<\/div>\n