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Semiconductor Shortage Threatens Global Automotive Production

A global semiconductor shortage is causing automobile manufacturers to cut back on production (Courtesy Nikkei Asia)

A global semiconductor shortage is reported to be causing a number of automotive manufacturers to cut back on vehicle production, despite growing demand following the coronavirus (COVID-19) pandemic. As reported in Nikkei Asia, the lack of supply has forced Germany’s Volkswagen Group, as well as Japanese automakers Toyota, Honda and Nissan, to reduce production of certain models.

The auto industry is said to be facing a severe lack of semiconductors amid rising use of the chips in other products, such as smartphones and communication base stations. Although the auto industry is seeing a rebound in demand, the coronavirus has also led to an increase in the use of PCs and smartphones. Semiconductor companies are reported to be struggling to meet the surge in demand as orders for different types of semiconductors are processed.

Toyota Motor has decided to reduce the production of its Tundra pickup truck at its plant in Texas, USA, due to the shortage. The company has not released details on the size or time frame regarding the production cut, but is reported to be looking into whether the lack of semiconductors will affect other vehicles.

Nissan Motor is reported to be cutting production of its Note vehicle by 5,000 units in January, a reduction that may continue through February. Volkswagen has already announced that it would cut production in China, North America and Europe. In Germany, the company also halted production of its Golf model in December, expecting this to be the case through mid-January. Seat, the VW Group’s Spanish automaker, will also cut production from the end of January until around April. Honda has also decided to reduce production of its Fit subcompact car by 4,000 units this month at its factory in Japan’s Mie Prefecture.

Kazuhiro Sugiyama, a consulting director at UK research company Omdia, said the competition has intensified, with orders to Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer, on backlog for the next six months.

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