"One Car Contains Hundreds of Semiconductor Types" US and European Supply Chain Collapse 'A Matter of Time'

Fear Spreads Over the 'Je 2 Wiring Harness Incident'

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyewon] The COVID-19 pandemic has triggered an emergency in the supply of hundreds of types of semiconductors required to produce a single automobile. This time, fears are growing that a second wiring harness crisis could arise not from China, but from Europe and the United States.

According to the Korea International Trade Association on the 20th, last year, South Korea's imports from the European Union (EU, 28 countries) and the United States amounted to $55.795 billion and $61.879 billion, respectively.

Among these, the top 10 imported items from Europe include semiconductor manufacturing equipment ($2.194 billion, 3rd), engines and pumps ($1.891 billion, 6th), measurement and control analyzers ($1.836 billion, 7th), automobile parts ($1.507 billion, 8th), mechanical components ($1.543 billion, 9th), and semiconductors ($1.497 billion, 10th).

Imports from the United States also rank semiconductors ($3.711 billion, 3rd), semiconductor manufacturing equipment ($3.220 billion, 4th), and aircraft and parts ($3.528 billion, 5th) among the top items.

South Korean automakers mainly import system semiconductors necessary for automobile production from Europe, the United States, and Japan. The import dependency rate for core vehicle semiconductor components such as electronic control units that control engines and transmissions, electronic control devices that operate various electronic equipment, and various sensors that collect vehicle information like temperature and humidity exceeds 90%. In contrast, the localization rate remains in the single digits.

In particular, system semiconductors show competitiveness only in some items linked to the demand of large domestic corporations, such as display driver chips and image sensors for mobile phones.

If the supply chain for vehicle semiconductor parts collapses, domestic automakers like Hyundai and Kia Motors will face the prospect of shutting down their factories again. The situation is the same for overseas factories. In Europe and the United States, not only automakers but also partner companies producing intermediate parts have already halted operations en masse, and logistics are paralyzed.

Supply disruptions of European and American parts inevitably affect all industries including automobiles, machinery, IT, batteries, and electronics.

Accordingly, the government and private companies have launched a comprehensive survey of raw material and parts supply, focusing on countries where factory shutdowns are occurring rapidly due to the spread of COVID-19, such as Europe and the United States.

Prime Minister Chung Sye-kyun's warning of a second wiring harness crisis at the Central Disaster and Safety Countermeasures Headquarters meeting on the 18th and his preemptive directive to prepare diversification measures for raw material and parts supply are in the same context.

A senior business official said, "Currently, the focus is on the contraction of the domestic industry, but the economic crisis in South Korea, which is highly dependent on exports, will quickly shift from domestic to export sectors," adding, "Europe and the United States have been a pillar replacing China during the COVID-19 phase, but without extraordinary government measures for export companies, even the recovering domestic industry will fall into a vicious cycle of collapse again."

The official added, "Overseas parts suppliers are in a blind spot of government support, so they should also be considered from the perspective of the entire industrial ecosystem."

This content was produced with the assistance of AI translation services.