May-June Peak of Car Semiconductor Crisis... 85% of Parts Companies Report "Severe Management Difficulties"

Rising Cost Burden↑·Production↓... Liquidity Crisis
Urgent Need for Drastic Measures Including Government Financial Support... Q3 Is the Golden Time

[Asia Economy Reporter Kim Hyewon] Due to the global shortage of automotive semiconductors, 85% of domestic auto parts companies are facing severe management difficulties. The industry expects the supply disruption of automotive semiconductors to peak in May and June, and they unanimously urge the government to promptly implement extraordinary support measures such as corporate tax and tariff reductions.

On the 10th, the Korea Automobile Industry Association (KAIA) conducted an urgent survey on semiconductor supply and production disruptions among 1st to 3rd tier auto parts suppliers. The survey found that out of 78 companies, 84.6% (66 companies) are experiencing management difficulties. ▶Related article page 3

Among the 78 companies, when asked the 21 parts suppliers directly handling automotive semiconductors, 90.5% reported management difficulties. This is because semiconductor supply disruptions caused parts prices to surge by more than 10-20% in the short term, increasing cost burdens, while production decreased by more than 10-30%. In particular, 38.1% of these companies stated that liquidity problems arose due to the timing gap where semiconductor purchase costs are paid immediately, but payment from higher-tier suppliers is received 1 to 3 months later.

Among the 57 parts suppliers not handling automotive semiconductors, 82.5% are experiencing very severe (27.9%) or severe (39.5%) management difficulties due to reduced delivery volumes caused by production disruptions at automakers. The first quarter management performance of the 78 companies showed that 51.3% experienced a decrease in sales, and 57.7% saw a decline in operating profit, indicating simultaneous deterioration in sales and profitability.

Among these companies, half identified 'financial support' as the most urgent government assistance. Regarding the timing for financial support, the majority selected 1 to 3 months later (57.5%) and 3 to 6 months later (30%), leading to the analysis that the third quarter of this year is the 'golden time.'

Jung Manki, chairman of KAIA, stated, "In addition to government-level international cooperation efforts to secure automotive semiconductors, special financial support programs involving guarantee and financial institutions, expansion of employment stabilization funds, and liquidity measures such as extension or reduction of corporate tax and tariffs must be promptly prepared." He added that they plan to propose these measures to related government departments.

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