Appliance Vendors Alarmed by Chip Shortage

By Alan Wolf, YSN

Add another industry to the list of those impacted by the worldwide semiconductor shortage: home appliances.

According to white-goods manufacturers, the scarcity of chips threatens to further hamper production for an industry that’s just beginning to recover from supply-chain challenges and months-long backorders. In an open letter to President Biden, Joe McGuire, president/CEO of the Association of Appliance Manufacturers (AHAM), warned that further industry disruptions “will severely impact appliance availability” and jeopardize vendors’ ability to reduce COVID-related backlogs.

Also sounding the chip alarm is Jason Ai, president/CEO of Whirlpool China. In an interview with Reuters this week, Ai said his chip deliveries were shorted by 10 percent in March, leaving his division scrambling for semiconductors. The chips are used to power-manage over half its products, including refrigerators, washers and microwave ovens, he said.

Industry observers say the scarcity was triggered when automakers cut their chip orders in anticipation of reduced demand for new cars during the pandemic. Meanwhile, sales of computers, mobile phones, TVs and other chip-based consumer electronics continued to soar as quarantined populations worked, schooled and entertained at home. The shortage was further exacerbated by panic purchases of semiconductors by nearly every business that uses them.

“It’s a perfect storm,” Whirlpool’s Ai told Reuters. “On the one hand we have to satisfy domestic demand for appliances; on the other hand, we’re facing an explosion of export orders.”

In his letter to Biden, AHAM’s McGuire described the situation as “urgent,” and implored the president to avoid reallocating chips away from appliance makers, as white goods “are critical to life at home.”

“Now more than ever, families are depending on home appliances to ensure homes are safe, sanitary, to prepare and preserve food, and to ensure access to clean and safe water,” McGuire wrote. He also called for an immediate increase in global chip production.

For his part, President Biden in February ordered a comprehensive review of the crisis for the purpose of crafting policies that will strengthen supply chains, CNBC said, following bipartisan calls for action by congressional and business leaders. The U.S. accounts for only about 12.5 percent of the world’s chip capacity, according to the Semiconductor Industry Association, with the balance largely located in China and Taiwan.