A global semiconductor shortage is causing auto manufacturers like Toyota and Volkswagen to cut back on production, notes the Nikkei Asian Review.
Semiconductors are crucial for the auto industry as electric vehicles and autonomous driving become more popular.
According to KPMG Japan, an EV uses twice the number of semiconductors compared to that of a gasoline-powered vehicle.
Experts attribute this current dearth to chips finding their way into other products such as smartphones and communication base stations.
Toyota for one has decided to reduce production of its Tundra pickup truck at its Texas plant due to the semiconductor shortage.
It hasn’t yet released details on the size or time frame regarding the production cut, but is looking into whether the lack of semiconductors will affect other vehicles.
The Japanese giant has always been at the forefront of explaining its production plan for the upcoming year. But the global chip crunch has caused Toyota to struggle to formalize a plan.
Nissan too is cutting down on the production of its flagship vehicle ‘Note’ by 5,000 units in January – a reduction it says may continue through February.
Honda has also decided to reduce production of its Fit subcompact car by 4,000 units this month at a factory in Japan’s Mie Prefecture.
Among the German automakers, Volkswagen has announced that it would cut production in China, North America and Europe.
In Germany, the company also halted production of its Golf model starting in December and lasting through mid-January.
According to the Nikkei, most automakers have been scrambling, as deliveries by German auto parts suppliers like Continental and Bosch have been delayed due to the chip shortage.
Moreover, semiconductors procured from major companies such as Dutch-American NXP Semiconductors and Switzerland-based STMicroelectronics have also lagged.
A major cause of the bottleneck comes from the semiconductor industry’s horizontal configuration, in which production and development are separate, with each manufacturer specializing in a particular task.
Chipmakers often place orders with contract manufacturers instead of fabricating chips in-house. It takes time to manufacture semiconductors while reconfiguring lines to accommodate varying specifications, making it difficult to turn out different chips at the same time.
According to the latest report, Continental has disclosed that “it will possibly take half a year” until supply for vehicle semiconductors normalizes.
Image and content: Nikkei Asian Review
