GM Korea will stop overtime (weekend work). It is not because of labor-management conflict, decreased sales, or the spread of a novel coronavirus infection (Corona 19). Automotive semiconductors with the size of nails caught the company’s ankles.
Due to the large shortage of semiconductors in automobiles, automobile production is interrupted or delayed. This is the aftermath of global semiconductor companies delaying the production of semiconductors for vehicles as they preferentially produce semiconductors for home appliances and information technology (IT) products.
Semiconductor stopped at automobile factories
According to the automobile industry on the 21st, GM Korea canceled the extra work at the Bupyeong plant that it planned to do on the 23rd. A company official said, “Some vehicle semiconductors supplied from the headquarters of General Motors in the United States are insufficient. It is known that GM Korea is not properly supplied with semiconductors related to vehicle control units (ECUs) and infotainment (devices that display information and entertainment in vehicles). This is the first time that a domestic automaker has cut production because it cannot obtain a semiconductor.
There are 200 to 400 semiconductors in automobiles. Semiconductors are required for each component, from ECUs that control automobile engines and transmissions to sensors that detect temperature and humidity. There are almost no semiconductor-free components such as front and rear cameras, advanced driver assistance systems (ADAS), infotainment, electronic keys, lighting, steering wheel, and side mirrors. An industry insider explained, “In the past, parts that were controlled by mechanical are also being changed to electronic systems that are controlled by sensors.” “The number of semiconductors in automobiles is increasing.”
It is analyzed that the lack of automotive semiconductors is the result of the production capacity of foundry (consignmented semiconductor production) companies not keeping up with demand. Most of the global automotive semiconductor companies such as NXP in the Netherlands, Infineon in Germany, and Renesas in Japan are fabless (design specialists) without production facilities. They entrust production to TSMC, Samsung Electronics, and UMC.
As the non-face-to-face culture expanded due to the spread of Corona 19 last year, demand for home appliances and smartphones increased. As a result, semiconductor orders flocked to foundry companies, and production of relatively inexpensive automotive chips was pushed back. In addition, it is explained that vehicle sales in the second half of last year have recovered to the level of previous years, leading to a severe shortage of automotive semiconductors.
“I need to develop semiconductor technology for vehicles”
Global automakers such as Volkswagen of Germany, Toyota of Japan and Ford of the United States have already started cutting production due to lack of semiconductors. Ford, FiatChrysler and others have long suspended certain factories, and Audi has more than 10,000 employees on leave. “The biggest variable that will threaten the automobile industry this year is not the Corona 19 nor the global recession, but the shortage of semiconductor supply” has been said.
The semiconductor shortage phenomenon has been regarded as’the story of another country’. It is expected that Korean automakers have secured relatively ample inventory and will receive first-hand supply from domestic semiconductor companies. However, as GM Korea begins to adjust production, there are growing concerns that there may be disruptions in the operation of domestic automobile factories sooner or later. Other automakers such as Hyundai Motor Company and Kia Motors are known to have secured semiconductors for about a month.
On the 22nd, the Korea Automobile Industry Association holds an emergency meeting with officials from the automobile industry and semiconductor industry to find a solution. Representatives of domestic fabless companies also attend. An industry insider said, “It is impossible to increase the quantity right away because it is impossible to find a foundry company with production capacity. Even if we place additional orders, it will take at least six months to receive.”
Domestic foundry companies, such as Samsung Electronics DB Hitech, are not focusing on producing semiconductors for vehicles. Also, domestic fabless companies in charge of design are concentrating their capabilities in other fields. An industry insider said, “It is necessary to reduce the dependence on overseas automobile semiconductors by increasing the technology of domestic companies.”
Reporter Do Byeong-wook/Hwang Jeong-soo [email protected]