57.5% of Auto Parts Companies Say "Urgent Financial Support Needed Within 3 Months"

Automotive Parts Companies Urgently Call for Government Financial Support Amid Semiconductor Shortage

Export waiting vehicles at Pyeongtaek Port (archival photo)

[Asia Economy Reporter Changhwan Lee] The vehicle semiconductor supply shortage, which intensified from December last year, has reached its peak this month, threatening the automotive industry ecosystem. However, the government has yet to present a clear solution.

Although measures have been initiated to strengthen the competitiveness of the semiconductor industry, including automotive parts, the support and pace lag behind major countries, making it difficult to feel the effectiveness. In particular, automotive parts companies directly hit by the vehicle semiconductor supply shortage unanimously agree that the government's financial measures must be implemented as soon as possible.

On the 10th, the Korea Automobile Industry Association (KAIA) conducted a survey of 78 automotive parts companies, with 50% of respondents stating that government financial measures are urgent.

Regarding the timing for financial support, 57.5% responded within 1 to 3 months, 30% within 3 to 6 months, and 7.5% within 1 month. It is analyzed that financial support measures must be prepared at least by the third quarter for the industry to properly utilize them.

Specific support measures requested by companies were loan program expansion at 41.8%, loan maturity extension at 29.9%, and expansion and easing of conditions for P-CBO (Project Collateralized Bond Obligation) issuance at 11.9%.

Companies also emphasized the need to activate accounts receivable secured loans at 13.4%, highlighting the urgency of preparing support measures to resolve financial difficulties caused by the time lag between semiconductor purchases and parts deliveries among vehicle semiconductor handling companies.

The scale of financial needs per company was 40% for over 500 million KRW to 1 billion KRW, 20% for over 1 billion KRW to 5 billion KRW, 25% for over 5 billion KRW to 10 billion KRW, and 12.5% for under 500 million KRW.

While companies on the ground urgently demand government financial support measures, an analysis shows that the government's financial support performance for companies is poor.

On the same day, the Korea Chamber of Commerce and Industry’s private research institute, the Korea Chamber of Commerce and Industry Sustainable Growth Initiative (SGI), stated in a report titled “Evaluation and Tasks of Corporate Financial Support in Response to the COVID-19 Crisis” that the performance of some financial support measures, such as the Industrial Stabilization Fund, is low compared to targets, and argued that utilization should be increased by relaxing support requirements and reallocating purposes.

According to the report, the Industrial Stabilization Fund was launched with a scale of 40 trillion KRW, but as of April this year, the support performance was about 600 billion KRW, only 1.5%. The low support performance was attributed to stringent support requirements. Kyunghee Min, SGI research fellow at the Korea Chamber of Commerce and Industry, said, "It is necessary to readjust financial support, which has so far focused on overcoming crises, to respond to changes in the global industrial structure."

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