Global car industry’s chip shortage worsens

22 March, 2021 12:00 AM printer

NEW YORK: A fire at a semiconductor factory in Japan, cold weather in North America and ongoing competition for chips are all hitting the global auto industry at the same time, threatening to exacerbate supply shortages of a key component that began late last year. A clean room at a plant run by Renesas Electronics, one of the top providers of automotive chips, was damaged by fire on Friday, the company said. The incident will probably have a big impact on the car industry, chief executive Hidetoshi Shibata said during an online news conference on Sunday, report agencies.

Global carmakers were already coming to grips with a shortage of chips caused by booming demand for laptops, tablets and home electronics by people staying and working indoors during the pandemic. Now, with supply chains already under strain, they have to contend with bad weather and other unanticipated disruptions to keep up production and recover from the steep drop in 2020 sales due to the coronavirus outbreak.

“I’m concerned that this will have a very big impact,” said Mr Shibata, adding that Renesas is seeking to resume operations at the facility within a month and anticipates 17 billion yen ($156 million) in lost revenue because of the incident. “We’ll pursue every possible measure, including the use of output alternatives, to make the impact as minimal as possible.”

Renesas gets about 6.6 per cent of its revenue from Toyota Motor, one of its main customers, according to Bloomberg’s Supply Chain Analysis. Renesas posted 715.7bn yen in revenue last year. Toyota has also warned that cold weather-induced semiconductor shortages will force it to suspend a factory in the Czech Republic for two weeks.

“This is terrible for the automobile supply chain; they might have to move toward holding more inventory,” Bloomberg Intelligence analyst Masahiro Wakasugi said of the Renesas fire. The big question is whether Toyota, which has been managing its supply chain better than other carmakers, will be hit, he said.

The following automakers have warned of chip-induced disruptions during the past week:

Toyota said on Saturday that its Kolin plant in the Czech Republic, which makes the compact car Aygo for the European market, will be taken offline. The factory was hit by low supplies of semiconductors caused by production delays after the cold weather in the US.

Ford Motor said the semiconductor situation and parts shortages created by the US winter storm in February will cause some production to be idled. F-150 trucks and Edge SUVs will be assembled without certain parts, including some electronic modules that contain scarce chips.

Nissan Motor is adjusting production schedules in North America because of semiconductor shortages. Operations at Smyrna, Tennessee, and Canton, Mississippi, have been impacted, while the automaker’s Aguascalientes plant in Mexico will be offline on Tuesday, according to Azusa Momose, a spokeswoman for Nissan.