Chip Shortage's Adverse Impact on Gentex Accelerated in Fourth Quarter

Gentex’s fourth-quarter 2021 saw the chip shortage finally directly prevent the company from making all the units it should, especially on more advanced feature mirrors such as the full display mirror. For most of 2021, Gentex’s production suffered because customers shut their lines down for other supplier shortages but in a rarity, Gentex could not keep its lines moving in the fourth quarter. The shortage led to Gentex’s mirror volume falling 18.1% year over year for the quarter versus a 20% light vehicle production decline in the firm’s key markets of North America, Europe, Japan, and Korea. We are not changing our fair value estimate, but we will reassess all valuation inputs when we roll our model forward a year after the 10-K is filed.