Global Semiconductor Shortage... Growing Anxiety in the Automotive Industry

Not an Immediate Shutdown... Strengthening Inventory Management

[Image source=Yonhap News]

[Asia Economy Reporter Kim Ji-hee] As the global automotive industry faces an emergency due to a shortage of automotive semiconductors, concerns among domestic companies are also rising. Although production lines do not have to be completely halted immediately, the difficulty in procuring semiconductors has led companies to closely monitor the situation and strengthen inventory management.

According to industry sources on the 13th, Korea GM recently canceled planned overtime and holiday work at its Bupyeong 1 plant this month due to semiconductor chip supply issues. Originally, after concluding wage and collective bargaining agreements at the end of last month, Korea GM planned to operate the Bupyeong 1 plant at full capacity by adding weekday overtime and holiday work. However, due to the shortage of automotive semiconductors, the scheduled extended work was canceled. Korea GM is currently setting production plans on a weekly basis while monitoring inventory status.

For now, Korea GM is strengthening parts monitoring. Korea GM sources a significant number of parts globally from its parent company, GM in the United States. Since GM, like other global automakers, is also affected by the semiconductor supply shortage, it is responding in cooperation with GM’s global organization.

Other domestic automakers are also continuing factory operations while closely watching the supply situation of semiconductor parts. In the case of Hyundai Kia Motors, it is known that production is continuing mainly for popular models while adjusting inventory. A Hyundai Kia Motors official said, "Although the semiconductor shortage is generally occurring in the global automotive industry recently, (Hyundai Kia Motors) has not yet been affected," adding, "We are securing safety stock as much as possible through first-tier suppliers and strengthening management systems for multi-sourcing."

However, it is analyzed that the shortage of automotive semiconductors will not be resolved in the short term. Due to the lockdown effects in Europe and the United States during the second and third quarters of last year, semiconductor factories’ operating rates dropped, intensifying the shortage of automotive semiconductors since December last year. On top of this, the recent rapid growth of the electric vehicle market has greatly increased demand. In particular, electric vehicles require more than twice the number of semiconductors compared to internal combustion engine vehicles, making the demand growth steep.

Lee Hang-gu, a research fellow at the Korea Automotive Technology Institute, said, "Last year, the demand for semiconductors for PCs and smartphones surged, leading semiconductor companies to focus more on related production. However, the decline in automobile production was less than expected and the recovery was faster, resulting in the shortage of automotive semiconductors," adding, "Even if production is increased, it is difficult for supply to expand significantly in the short term."

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