From Cars to Syringes... Global Supply Chain Impacted

(Source: WSJ)

[Asia Economy Reporter Yujin Cho] The global supply chain crisis, which began with semiconductors, is spreading to petrochemical products, the "rice" of the industry, raising tensions in the related sectors.

On the 17th (local time), according to The Wall Street Journal (WSJ), Japanese automakers Toyota and Honda announced that they will halt operations at their North American plants due to shortages of key supplies such as semiconductors and petrochemical products.

Honda stated that it will suspend operations at its U.S. and Canadian plants for one week starting on the 22nd, citing parts supply shortages as the cause. According to Nihon Keizai Shimbun, this is the first time Honda has completely stopped operations at its North American plants.

The semiconductor shortage crisis has spread to consumer electronics such as PCs, TVs, and smartphones. Japan's major panel manufacturer Japan Display is experiencing difficulties due to unstable semiconductor supply.

According to Nihon Keizai Shimbun, a Japan Display official said, "If we do not raise semiconductor prices, we cannot manufacture products, but we cannot predict how much of the raw material cost increase can be reflected in product prices," adding, "The semiconductor supply shortage will peak next month."

The biggest cause of the semiconductor supply chain crisis is increased demand. The overlapping effects of prolonged lockdowns due to COVID-19 and the surge in remote work boosted massive purchasing demand for IT-related products. Additionally, last month's record cold wave caused a complete shutdown of semiconductor plants in Texas, exacerbating the situation.

Moreover, labor shortages at ports due to COVID-19 and container shortages caused by trade imbalances have added to logistics issues such as delays in loading and unloading operations at California ports, further pressuring the supply chain.

The cold wave in Texas also impacted the petrochemical product supply chain. Power outages caused by the cold wave disrupted operations at U.S. petrochemical plants concentrated in Texas. Dow, a petrochemical company located in Texas, reported that its plant operating rate dropped to about 80% by the end of this month.

Due to the petrochemical product supply shortage, companies producing plastic-containing products such as syringes, containers for syringe disposal, medical gowns, and gloves are also facing difficulties. With the expansion of COVID-19 vaccine distribution, demand for medical devices has surged, but supply is falling short due to raw material shortages.

WSJ reported that plastic prices in Asia and Europe, the main import regions, are already on the rise due to the petrochemical product supply shortage. Dow's Chief Financial Officer Howard Ungerleider predicted, "It will take at least six months or more to resolve the plastic supply imbalance."

Manufacturers, while growing hopeful for economic reopening due to vaccine distribution, are increasingly concerned as the supply chain crisis deepens. WSJ noted that business executives and market analysts expect that the supply chain crisis will lead to increased production costs and logistics delays across numerous industries, ultimately affecting consumer prices.

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