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Why is there a chip shortage for cars?

Today's vehicles run on chips, hundreds of them.

ATLANTA — A chip shortage has been affecting the production of many everyday items, like phones and household appliances.

These chips also are important for car production and could impact sticker prices at the lot.

"Computer chips control the engine, make them more efficient. The navigation system in your car is loaded with chips," explained Chip White of Georgia Tech's School of Industrial Systems Engineering.

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Vehicle costs have soared and rental cars are more difficult to find, all because of this computer chip shortage.

White added that the demand for computer chips has been on the increase for a while and now, the pandemic has put even more pressure on manufacturers.

"There's an increase in demand for home entertainment, PC sales have risen by 13%, video calling has gone up, so data centers need more capacity and more computer chips," White said.

Meanwhile, manufacturing plants have struggled with the impacts of COVID-19, with White adding that rapid demand like this would have been a challenge even without a pandemic.

"The industry is not agile, it's not able to quickly adjust to new demand. It can't surge quickly like some other industries can," he concluded.

Work is underway on new manufacturing plants but White said these facilities take years to build and the costs are approaching $20 billion.

Because of that, it could be a while before supply catches demand. 

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