Semiconductor Issues and COVID-19 Resurgence Compound Challenges for the Car Industry

Hyundai Motor Ulsan Plant [Image source=Yonhap News]

[Asia Economy Reporter Changhwan Lee] The automotive industry is facing a worsening business environment as the shortage of vehicle semiconductors coincides with a resurgence of COVID-19.

According to the automotive industry on the 24th, Hyundai Motor's Ulsan Plant 3 was closed for a day due to a large number of COVID-19 cases. Weekend overtime work was also temporarily suspended. Ulsan Plant 3 produces models such as the Avante, Venue, older Ioniq models, and the i30.

It is reported that five confirmed cases occurred consecutively at Hyundai Motor's Ulsan Plant 3 from the 19th to the previous day. Due to concerns over a COVID-19 cluster infection, the plant was closed as a preemptive measure to prevent further spread. After disinfection, normal operations are expected to resume next week.

Hyundai Motor had previously shut down major plants as the damage from the vehicle semiconductor shortage intensified this month. Since the 7th, Ulsan Plant 1 was closed for about a week, and the Asan plant also suspended operations on the 12th-13th and 19th-20th. Ulsan Plant 1 produces the Ioniq 5, and the Asan plant is a key facility producing the Grandeur and Sonata.

Kia is also experiencing damage due to the semiconductor supply shortage. Kia's Georgia plant in the United States temporarily halted operations earlier this month due to semiconductor shortages, and domestically, weekend overtime at major plants such as Gwangmyeong and Gwangju was suspended. With the semiconductor shortage already causing damage, the resurgence of COVID-19 raises concerns about worsening impacts.

Hyundai Motor expects next month to be the peak semiconductor challenge. Seogang Hyun, Vice President of Hyundai Motor and Head of the Finance Division, said during the Q1 earnings conference call on the 22nd, "As the semiconductor supply situation is rapidly changing, it is difficult to predict production conditions after May," but added, "We are preparing for the possibility of production adjustments in May at a level similar to or greater than April."

Other domestic automakers are facing similar situations. Korea GM, which had stopped operations at some plants due to vehicle semiconductor supply disruptions, will continue production cuts even after resuming production next week. According to Korea GM, Bupyeong Plant 1 and Plant 2, which were closed from the 19th to the 23rd, will resume production on the 26th but will operate at 50% capacity.

Additionally, the Changwon plant, which had been operating normally, will run at half capacity starting from the 1st of next month. Korea GM's Bupyeong Plants 1 and 2 produce the Trailblazer, Malibu, and Trax, while the Changwon plant produces the Spark.

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