It's time for carmakers to prepare for long battle
Carmakers here are struggling with the global shortage of automotive semiconductors. Production disruptions are partly due to the pandemic, but it's just a matter of time before a full-blown crisis hit them.
GM Korea's second plant in the bupyeong District of Incheon has been running at half capacity since Feb. 8 due to a significant shortage of chips. The Korean unit of the U.S. car giant General Motors is monitoring its supply situation closely to determine production plans for the coming weeks.
Hyundai Motor and Kia are reportedly checking their semiconductor inventory status by the week. The two companies are also adjusting production plans, focusing on models having automotive chips that are in their inventories. "Some parts' inventory levels are at an emergency level and we may run out of stock in weeks," an official at Hyundai Mobis, a component affiliate of Hyundai Motor and Kia, was quoted as saying. Separately, Hyundai Motor has embarked on direct negotiations to secure chips needed for its cars.
Global carmakers such as Germany's Volkswagen have already started cutting back on production due to the lack of semiconductors. About 200 to 400 chips are needed to produce gas- and diesel-powered cars, but self-driving vehicles need up to 2,000 semiconductors. According to IHS Markit, a London-based data analysis company, the looming chip shortage will result in a disruption in production of 1 million vehicles globally in the first quarter.
The semiconductor supply bottleneck is unlikely to be solved in the short term, given the characteristics of the automotive chips. This market has significant entry barriers because of the high standards of trust and safety requirements. Furthermore, the supply situation is getting worse owing to power outages in the U.S. that forced chipmakers such as NXP and Infineon to halt production. Now is the time for carmakers to prepare for a long battle. It's imperative for the government and businesses to cooperate closely to look for alternative sourcing where possible.
Carmakers here are struggling with the global shortage of automotive semiconductors. Production disruptions are partly due to the pandemic, but it's just a matter of time before a full-blown crisis hit them.
GM Korea's second plant in the bupyeong District of Incheon has been running at half capacity since Feb. 8 due to a significant shortage of chips. The Korean unit of the U.S. car giant General Motors is monitoring its supply situation closely to determine production plans for the coming weeks.
Hyundai Motor and Kia are reportedly checking their semiconductor inventory status by the week. The two companies are also adjusting production plans, focusing on models having automotive chips that are in their inventories. "Some parts' inventory levels are at an emergency level and we may run out of stock in weeks," an official at Hyundai Mobis, a component affiliate of Hyundai Motor and Kia, was quoted as saying. Separately, Hyundai Motor has embarked on direct negotiations to secure chips needed for its cars.
Global carmakers such as Germany's Volkswagen have already started cutting back on production due to the lack of semiconductors. About 200 to 400 chips are needed to produce gas- and diesel-powered cars, but self-driving vehicles need up to 2,000 semiconductors. According to IHS Markit, a London-based data analysis company, the looming chip shortage will result in a disruption in production of 1 million vehicles globally in the first quarter.
The semiconductor supply bottleneck is unlikely to be solved in the short term, given the characteristics of the automotive chips. This market has significant entry barriers because of the high standards of trust and safety requirements. Furthermore, the supply situation is getting worse owing to power outages in the U.S. that forced chipmakers such as NXP and Infineon to halt production. Now is the time for carmakers to prepare for a long battle. It's imperative for the government and businesses to cooperate closely to look for alternative sourcing where possible.
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