Automakers hit the brakes again amid chip shortage | Automotive Industry News

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A shortage of critical semiconductors is emerging as another supply chain headache for automakers

General Motors, Ford and Hyundai have made further production cuts and closed more assembly plants because of the global semiconductor shortage plaguing automakers.

Hyundai Motor said on Friday that it will suspend production for two days, starting on Monday, at its Asan, South Korea plant.

“We are closely monitoring the situation to take prompt and necessary measures to optimise production in line with the supply conditions,” Hyundai said in a statement.

On Thursday General Motors said it is temporarily halting output at several North American plants and extending other shutdowns in Kansas and Canada due to a lack of chip supply.

Ford said this week that it is cancelling production at assembly plants in Chicago, Michigan with a partial closure of its Kansas facility. It will also reduce output in Ohio.

The company also told workers at its US assembly plants it will cancel most of its traditional summer shutdowns to catch up with the spiralling production backlogs.

Disruption caused by the semiconductor shortage has propelled the crisis high up on the agenda of US President Joe Biden. The White House is expected to hold a meeting with US automaker chiefs and technology executives on Monday.

Biden is also exploring a $50bn investment to increase semiconductor production on US soil to ensure semiconductor self-sufficiency in the long term. Outside the US leading chipmaking nations include Taiwan, South Korea, Japan and China.

A perfect storm of Covid-19, severe weather, factory fires and soaring demand for silicon has resulted in an unprecedented shortage affecting multiple sectors.

Costs for car manufacturers are mounting, with Ford warning a continued shortage could end up costing the company between $1bn and $2.25bn this year.

Automakers including General Motors and Ford have resorted to building vehicles with missing parts to be added later in production.

A typical modern car can have more than 100 semiconductors powering functions such as fuel economy or connected features.

GlobalData Automotive analysts, in a briefing issued in January, stated that “modern vehicles are as reliant on computer chips as they are on their engines and chassis” and noted that electronic content in modern vehicles is estimated to account for some 30% of the bill of materials, with the prospect of this increasing to 50% by 2030. As a result, automotive production is “as reliant on computer chips as the consumer electronics industry.”

The shortage has created a bottleneck affecting sectors beyond automobile, including gaming, personal computing and telecoms.

Apple has reportedly had to delay production of some of its MacBooks and iPads, according to Nikkei. Next-gen games consoles such as the PlayStation 5 and Xbox Series X have also been vying for chip supply amid high demand. Samsung has previously warned of a “serious imbalance” in the semiconductor industry, with some commentators warning the shortage will continue into 2022.

There was some good news for the automobile industry though. Rensas Electronics said it will resume chip production at its Naka Factory in Hitachinaka, Japan, on 19 April after a fire closed the factory last month.

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