In a FEDS Note, Federal Reserve Board staff analyze the 2021-2022 semiconductor shortage and estimate that U.S. light vehicle production fell by more than 2 million units relative to a baseline based on fourth-quarter 2020 output. Automakers contained further losses by prioritizing higher-margin vehicles and removing chip-intensive features. A counterfactual exercise suggests that selective feature deletions may have prevented an additional 100,000 to 200,000 lost units, although these measures reduced the availability of lower-priced vehicles and may have affected vehicle quality. Production fell 20% below fourth-quarter 2020 levels by the third quarter of 2021 and did not return to pre-crisis levels until early 2023. Microcontroller lead times roughly doubled from 15 to 30 weeks, prompting manufacturers to reduce production of lower-priced models and omit features such as infotainment systems, wireless charging and keyless entry. Vehicles with high infotainment exposure recorded production rates about 0.5% below less-exposed vehicles over 2021-2022, while average adoption of infotainment features in model-year 2022 vehicles was about 6 percentage points below pre-pandemic trends. The analysis warns that future disruptions may center on advanced logic and memory components rather than mature-node microcontrollers. Software-defined vehicles, driver assistance systems and autonomous driving capabilities are increasing semiconductor demand and may put automakers in greater competition with artificial intelligence companies for advanced chips and memory.
Source: 2026-09-28Federal Reserve Board
Federal Reserve Board analysis estimates automaker chip shortage measures may have prevented up to 200,000 additional vehicle production losses
Federal Reserve Board staff estimate that the 2021-2022 semiconductor shortage reduced U.S. light vehicle production by more than 2 million units. Prioritizing higher-margin vehicles and deleting chip-intensive features may have prevented another 100,000 to 200,000 losses, but constrained affordable vehicle supply and may have reduced quality. Future risks are shifting toward advanced logic and memory chips as vehicles become more software-intensive.