Weekend fire at key chip-makers forces car plants to cut down on production
Prior to the fire, there have been persistent problems with the supply of semiconductors, which are used in vehicles
24 March 2021 - 11:16
byReed Stevenson and River Davis
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Tokyo — Many of the world’s biggest carmakers are suspending operations at their factories in Asia, Europe and North America due to a persistent shortage of semiconductors that was exacerbated by a fire at a key chip-producing plant at the weekend.
Ford, Toyota, Volkswagen and Honda are among those affected by problems with the supply of semiconductors, which are used in vehicles to manage and monitor everything from engine and driving performance to air-conditioning and entertainment systems.
“Production is really vulnerable right now,” Bloomberg Intelligence vehicle industry analyst Tatsuo Yoshida said. “Any kind of abnormal occurrence causes parts to run out.”
The shortage initially came about as rising demand for cars coincided with a boom in the market for devices such as laptops, webcams and gaming systems as people spent longer at home due to the pandemic. That diverted chips away from the vehicle industry, which had earlier slashed orders after Covid-19 caused their sales to collapse. Winter storms in the US also affected semiconductor supplies, and then the situation worsened this week after a fire damaged a plant run by Renesas Electronics, a top provider of automotive chips.
Analysts at Mitsubishi UFJ Morgan Stanley Securities already estimated in January that the shortage would reduce global vehicle production by 1.5-million units, with Japanese carmakers accounting for roughly a third of that total.
Here are some of the latest stoppages by vehicle-makers:
Hyundai is suspending extra work on weekends to adjust production of brands including Kona, Avante, Grandeur and Sonata, the Seoul Economic Daily reported.
Honda is suspending production at six factories in the US, Canada and Mexico, citing the chip shortage as well as congestion at ports and cold weather.
Volvo is implementing stop days across global truck manufacturing operations, saying it sees a “substantial impact” from the global semiconductor shortage.
Ford has halted production at a factory in Ohio and dropped one shift at another in Kentucky, both until March 29. It said F-150 trucks and Edge SUVs would be assembled in North America without certain parts and shipped to dealers once electronic modules that contain chips are available.
Nissan is adjusting production across its operations in the US and Mexico.
Operations at Toyota’s Kolin plant in the Czech Republic, which makes the compact car Aygo for the European market, have been suspended for two weeks from March 22 after cold weather in the US disrupted chip production.
Volkswagen is halting production at a plant in Portugal from March 22-28.
Mitsubishi Motors is reducing domestic output of vehicles by 4,000-5,000 units in March and reviewing production plans for April.
With the exception of Volkswagen, the share prices of all of those carmakers have fallen this week, tracking declines in the S&P supercomposite auto parts and equipment index, which is down 10% from a March 17 peak.
The Renesas fire will halt a production line for 300mm wafers for at least a month and probably have a big effect on the car industry, CEO Hidetoshi Shibata said during an online news conference on Sunday. Underscoring the severity of the outage, Toyota and Nissan dispatched workers to help in recovery efforts.
“The automotive industry is key in Japan, therefore any incident that impacts it has a broad effect on the economy,” said Roman Schorr, a director at Fitch Ratings. With the added variable of a chip crunch, “it’s certainly striking that so much right now hinges on one factory”, he said.
Shibata will join executives from Tokyo Electron and Kioxia Holdings, as well as representatives from the vehicle sector, at a meeting with Japan’s economy ministry later on Wednesday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Weekend fire at key chip-makers forces car plants to cut down on production
Prior to the fire, there have been persistent problems with the supply of semiconductors, which are used in vehicles
Tokyo — Many of the world’s biggest carmakers are suspending operations at their factories in Asia, Europe and North America due to a persistent shortage of semiconductors that was exacerbated by a fire at a key chip-producing plant at the weekend.
Ford, Toyota, Volkswagen and Honda are among those affected by problems with the supply of semiconductors, which are used in vehicles to manage and monitor everything from engine and driving performance to air-conditioning and entertainment systems.
“Production is really vulnerable right now,” Bloomberg Intelligence vehicle industry analyst Tatsuo Yoshida said. “Any kind of abnormal occurrence causes parts to run out.”
The shortage initially came about as rising demand for cars coincided with a boom in the market for devices such as laptops, webcams and gaming systems as people spent longer at home due to the pandemic. That diverted chips away from the vehicle industry, which had earlier slashed orders after Covid-19 caused their sales to collapse. Winter storms in the US also affected semiconductor supplies, and then the situation worsened this week after a fire damaged a plant run by Renesas Electronics, a top provider of automotive chips.
Analysts at Mitsubishi UFJ Morgan Stanley Securities already estimated in January that the shortage would reduce global vehicle production by 1.5-million units, with Japanese carmakers accounting for roughly a third of that total.
Here are some of the latest stoppages by vehicle-makers:
With the exception of Volkswagen, the share prices of all of those carmakers have fallen this week, tracking declines in the S&P supercomposite auto parts and equipment index, which is down 10% from a March 17 peak.
The Renesas fire will halt a production line for 300mm wafers for at least a month and probably have a big effect on the car industry, CEO Hidetoshi Shibata said during an online news conference on Sunday. Underscoring the severity of the outage, Toyota and Nissan dispatched workers to help in recovery efforts.
“The automotive industry is key in Japan, therefore any incident that impacts it has a broad effect on the economy,” said Roman Schorr, a director at Fitch Ratings. With the added variable of a chip crunch, “it’s certainly striking that so much right now hinges on one factory”, he said.
Shibata will join executives from Tokyo Electron and Kioxia Holdings, as well as representatives from the vehicle sector, at a meeting with Japan’s economy ministry later on Wednesday.
Bloomberg
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