The crisis in the automobile industry has begun due to the shortage of semiconductor supply. GM Korea decided to cut the production volume of Bupyeong Plant 2 to half the previous level due to shortage of semiconductors for vehicles. The photo shows a production line at the Bupyeong plant that was stopped due to a supply disruption due to the spread of Corona 19 in February of last year. Hankyung DB
GM Korea is not able to withstand the scarcity of automotive semiconductors and is starting to cut production. There was an unprecedented situation in which automobiles could not be manufactured without semiconductors. According to the analysis, the crisis in the automobile industry due to the shortage of semiconductor supply has begun in earnest.
On the 4th, GM Korea announced on the 4th that it will cut the utilization rate of the 2nd plant in Bupyeong to half of the previous year. Production is also expected to drop from 10,000 units per month to 5,000 units. This is the first time that a domestic automobile factory has decided to reduce production because it cannot obtain semiconductors.
The production cut is the decision of the headquarters of General Motors (GM) in the United States. GM’s Fairfax in the US, Ingersoll in Canada, and Photo plants in Mexico are halting production entirely. It is reported that the monthly production cuts of four factories including Bupyeong 2 plant will reach 50,000 units. GM Korea said, “Semiconductor supply is in a very fluid situation,” and “We plan to establish and operate the production plan on a weekly basis.”
The lack of semiconductors is not just a problem for GM. Global automakers, such as Audi, Ford, Toyota, Fiat Chrysler, and Volkswagen, also began to reduce production one after another from last month. In the industry, there are concerns that domestic companies such as Hyundai Motor Company and Kia may soon face a situation where they cannot produce semiconductors because they do not have semiconductors.
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“The shortage of automotive semiconductor supply will continue through the third quarter of this year.”
This is a warning from market research firm IHS Markit that the situation in which automobiles cannot be produced without semiconductors will continue for a while. One of the core semiconductors, the Micro Control Unit (MCU), can be delivered after 26 weeks even if it is ordered now. There are concerns in the industry that global automobile production this year could decrease by 2-4% compared to the original forecast due to the shortage of semiconductor supply.
GM Korea “The production plan should be changed every week”
Among domestic automakers, GM Korea was the first to suffer. On the 4th, GM Korea announced on the 4th that it will reduce the production of its 2nd plant in Bupyeong to half the level from the 8th. Bupyeong Plant 2 produces Malibu and Trax. A plan is being reviewed to convert two shifts to one shift or to cut the number of working days in half. A company official said, “We usually set up a production plan on a monthly basis, but for the time being, we have no choice but to change the production plan every week,” he said. “I don’t know when the factory will operate normally.”
General Motors (GM)’s Fairfax in the US, Ingersoll in Canada, and Potosi in Mexico have decided to shut down. On the 10th, GM will unveil the plant operation plan in detail. An industry insider said, “In the long term, there is a high possibility that other GM plants in Korea, such as the Bupyeong Plant 1 and Changwon Plant, will also be cut off.” did.
Other automakers are also struggling because they cannot find semiconductors. Ford shut down some factories, and Audi took more than 10,000 employees off. Toyota, Volkswagen, FiatChrysler, Honda and Nissan are also reducing production at specific models or specific factories.
There is also a forecast that automotive semiconductor prices will rise. It is known that semiconductor manufacturers have begun negotiations with automakers to raise product prices. This is a phenomenon that happened when semiconductor companies became’cap’. Industry opinion is that a 10% increase in semiconductor prices will increase the production cost of automobiles by about 0.2% and reduce the operating profit of automakers by about 1%.
Rapid growth in the semiconductor market
There are 200 to 400 semiconductors in automobiles. There are various types, from core parts such as vehicle control units (ECUs) that control automobile engines and transmissions to sensors that detect temperature or humidity. There are almost no semiconductor-free components such as front and rear cameras, advanced driving assistance systems (ADAS), infotainment (devices that provide information in the vehicle), electronic keys, lights, steering wheel, and side mirrors.
As electronic devices in automobiles increase, the number of semiconductors required is increasing. There is an observation that more than 2,000 semiconductors will be needed when the era of autonomous vehicles comes. IHS Markit predicts that the automotive semiconductor market will grow from $41.8 billion in 2019 to $65.5 billion in 2024.
The sudden shortage of automotive semiconductors this year was largely affected by the Corona 19 pandemic. Global automakers postponed orders for semiconductors in preparation for a sharp decline in automobile sales, while foundry (consigned semiconductor production) companies began to produce semiconductors related to home appliances and information technology (IT).
With the spread of non-face-to-face culture, the demand for semiconductors increased significantly, and global automobile sales began to rebound. Automakers started to order Buryaburya semiconductors, but foundries had received all orders for six months.
Other domestic automakers other than GM Korea are also tense. It is known that Hyundai Motor Company and Kia have secured 2 to 3 months of supply. There is no immediate need to cut production, but if the shortage of semiconductors prolongs, it will inevitably be affected. The Korea Automobile Industry Association recently held an emergency meeting.
The industry plans to ask the government to prepare measures. It means that the government will ask for the secure supply by negotiating with Taiwan’s TSMC, the world’s largest foundry company, or a domestic company.
Reporter Do Byeong-wook [email protected]