FEDS Note: When the Chips Went Down: Motor Vehicle Production and the 2021-2022 Semiconductor Shortages

Adrian Hamins-Puertolas and Maria D. TitoThe motor vehicle industry suffered severe production disruptions during 2021 and 2022, as semiconductor shortages—triggered by pandemic-era plant closures and shifting demand patterns—brought some assembly lines to a standstill. Having recovered to nearly pre-pandemic levels by the fourth quarter of 2020, aggregate U.S. light vehicle production plunged in early 2021, ultimately falling 20 percent below 2020:Q4 levels by the third quarter (figure 1).