Shortage Likely to Last Longer than Expected

Hyundai Motor's Plant in Asan, South Chungcheong Province

Hyundai Motor will suspend the operation of its plant in Asan, South Chungcheong Province, from Sept. 9 to 10 due to a semiconductor shortage. The plant, which rolls out the Grandeur and the Sonata, also stopped operating in July and August due to the construction of electric vehicle lines. Hyundai Mobis’s plant in Asan, which makes modules, has also decided to suspend operations for two days.

The suspension of the Asan Plant is blamed on disruptions in the supply of engine control unit (ECU) semiconductors from a Malaysian plant, which is not operating normally due to the spread of the COVID-19 delta variant in Southeast Asia.

Major semiconductor companies, such as Germany's Infineon, the Netherlands' NXP, and Japan's Renesas, have factories in Southeast Asia. The number of automotive semiconductor suppliers in this region amounts to 98, including those in Malaysia, Thailand, the Philippines, Singapore, Indonesia, and Vietnam. Among them, Malaysia has the largest number of 25. Japanese companies such as Toyota, Honda, and Nissan, which have many factories in Southeast Asia, are also going through production disruptions.

GM Korea's Bupyeong Plant 1, which produces the Trailblazer, has also cut production by 50 percent. GM Korea has lowered output at its Bupyeong Plant 2 due to a shortage of chips. This plant produces the Malibu and the Trax.

Industry insiders predict that the semiconductor shortage will last longer than expected. CEOs of major automobiles predicted that the aftermaths of the semiconductor shortage will continue from 2023 to 2024. Daimler Chairman Ola Källenius predicted that structural problems in semiconductor demand and supply will affect by next year and may not be eased until 2023.

Another problem is that automakers are rushing to switch to electric vehicles while reducing production of vehicles powered by internal combustion engines. While the number of semiconductors for internal combustion engine-based cars is about 300, electric vehicles need 3,000 semiconductors, 10 times more.

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