From Refrigerators to Vacuum Cleaners in Cars... Production Disruptions Due to Semiconductor Shortage

[Asia Economy Reporter Yujin Cho] Major foreign media reported on the 29th (local time) that production disruptions caused by the semiconductor chip shortage are spreading from automobiles to home appliances.

Global home appliance company Whirlpool stated that production of export volumes to Europe and the United States is being disrupted due to the shortage of semiconductor chips, with production disruptions occurring in about one-quarter of the volume in severe cases.

Jason Ai, president of Whirlpool's China branch, said that they are experiencing production difficulties due to a shortage of microcontrollers used in more than half of their products such as microwaves, refrigerators, and washing machines.

Chinese home appliance company Hangzhou Robam Appliance has also delayed the launch schedule of new products by about four months due to a shortage of microcontrollers.

Major foreign media reported that as all home appliance companies, including Whirlpool, increase their purchases to maintain high semiconductor inventory levels, the semiconductor supply shortage for home appliance companies is expected to worsen.

Xiaomi is cutting its marketing budget and hiring additional staff to coordinate with suppliers in order to resolve the shortage of microcontrollers and flash memory chips.

An executive in charge of marketing at vacuum cleaner manufacturer Dreame stated, "We have invested millions of yuan in development and testing costs while developing alternative chips to resolve the semiconductor chip shortage."

Source: Reuters

The impact of the semiconductor chip shortage on industries began to surface at the end of last year and became visible from January this year.

The cause was the overlapping of massive purchasing demand for IT-related products, which benefited from prolonged lockdown measures and the spread of remote work due to COVID-19.

Additionally, most automakers, fearing a consumption slump at the early stage of the COVID-19 crisis, reduced parts orders to keep parts inventory low, which exacerbated the production disruption situation.

The semiconductor chip shortage has expanded to global automakers including General Motors (GM). GM closed automobile and crossover plants in Kansas, Canada, and Mexico, and Volkswagen, Ford, Subaru, Toyota, Nissan, Stellantis, and others have also decided to cut production one after another.

According to market research firm IHS, global automobile production is expected to decrease by about one million units in the first quarter of this year alone due to semiconductor supply disruptions. Consulting firm AlixPartners predicted that the resulting revenue loss in the automobile industry will reach $61 billion this year.

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