Moody's Corporation Investor Service estimated in a report on Tuesday that the global chip shortage will make General Motors CoAnd Ford.The company's profits fell by about 1/3 this year as supply constraints hampered production and profits.

Moody's Corporation said the chip shortage would seriously erode profit margins and could reduce GM's profit before interest and tax (EBIT) by $2 billion and Ford by $2.5 billion. GM's EBITA margin could fall to 3.4 per cent and Ford's to 1.8 per cent.

Moody's Corporation said that the rising demand for chips for advanced and connected cars has brought a series of new challenges to the North American auto industry, forcing them to cut production or temporarily close factories. Demand from consumer electronics companies exacerbated supply shortages during the pandemic.