April 21, 2021

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Fire and Ice Aggravate Chip Supply Headache for Car Industry

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(Bloomberg) — 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 Corp., one of the biggest makers of automotive chips, was damaged by fire on Friday, the company said. Toyota Motor Corp., an important Renesas customer, also said cold weather-induced semiconductor shortages will force it to suspend a factory in the Czech Republic for two weeks.

Global automakers 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.

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“There will be an impact,” 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 automakers, will be hit, he said. “This is terrible for the automobile supply chain. They might have to move toward holding more inventory.”

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The following automakers have warned of chip-induced disruptions over 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 U.S.Ford Motor Co. said the semiconductor situation and parts shortages created by the U.S. 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 Co. 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 Tuesday, according to Azusa Momose, a spokeswoman for Nissan.Honda Motor Co. warned that some plants in the U.S. and Canada will see disruption in the coming week as the pandemic, a chip shortage and severe winter weather all impact its supply chain. The carmaker will halt work at plants in Marysville and East Liberty in Ohio, as well as others in Indiana, Alabama and Ontario, potentially for a week, it said.Volkswagen AG’s Autoeuropa plant in Portugal will halt production from March 22-28 due to shortage of semiconductors.BMW CEO Oliver Zipse said on Bloomberg Television the German automaker can’t guarantee it will avoid production stoppages related to the global shortage, though it’s avoided disruptions so far.Mitsubishi Motors Corp. is reducing domestic output of vehicles by 4,000-5,000 units in March due to a shortage of semiconductors, and reviewing its production plans for April.

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Cold weather in North America is also disrupting supplies of other raw materials used for automobile manufacturing.

Toyota warned in the past week that the cold front has reduced supply of petrochemical products, impacting production in the U.S. and Mexico. Some lines, shifts or potentially entire plants are expected to be temporarily halted for several days in Kentucky, West Virginia and Mexico, the company said.

Toray Industries Inc. has warned buyers of its Nylon 66 fiber, used mainly for vehicle airbags, that it may not be able to fulfill its obligations to supply the product because it doesn’t have enough raw materials to make it due to the U.S. cold snap.

©2021 Bloomberg L.P.

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Bloomberg News

2021-03-20 06:31:53

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