Semiconductor supply shortages hit automotive giants

1 min read

There's no sign of the global shortage of semiconductors easing, with the news that both Toyota and VW are to cut car production, the former by a whopping 40 per cent in September.

According to Volkswagen a semiconductor supply crunch could force it to slow production lines during the autumn, adding to cuts that have been in place since near the start of the year, while Toyota has confirmed that it is to slash output by 40% in September.

Covid-19 is continuing to impact the supply chain with outbreaks in Asia having a significant impact on chip production and on operations at commercial ports.

Speaking to Reuters, VW said that while it expected the supply of chips in the third quarter to be very volatile and tight, Toyota went further and warned that further changes to production might occur - "We can’t rule out further changes to production," said a spokesperson.

These continued production woes follow on from news that chipmaker Infineon, the top automotive supplier, had to suspend production at one of its plants in Malaysia in June, due to a coronavirus outbreak.

Reinhard Ploss, the Infineon chief executive, warned that the automotive industry is facing “acute supply limitations across the entire value chain” and it would take until well into 2022 for "supply and demand to be brought back into balance."

The pressure is now building on Taiwanese semiconductor manufacturers to boost production but with many already pushing production beyond the usual 100% to meet increased demand, it's hard to see what else they can do in the short term.