Amid COVID Resurgence... Semiconductor Crisis Grows Again in the Auto Industry

Hyundai Motor Overtime Disrupted by Semiconductor Shortage, GM Korea Reduces Operating Rate

[Asia Economy Reporter Changhwan Lee] The vehicle semiconductor parts shortage crisis, which showed signs of improvement until last month, is now resurfacing.

As the resurgence of COVID-19 worsens mainly in Southeast Asia, including Malaysia, production at local parts factories is being disrupted. If the spread of COVID-19 is not contained, concerns are growing that the vehicle semiconductor supply shortage will expand in the second half of the year.

According to the automotive industry on the 11th, some lines at Hyundai Motor's Ulsan plant have not scheduled weekend overtime work for this weekend. Until just before the summer vacation last month, the supply of vehicle semiconductors had increased, and weekend overtime work at all plants was expected in August, but the recent instability in semiconductor supply has caused disruptions to the schedule.

The worsening vehicle semiconductor supply situation this month is due to the global resurgence of COVID-19, which has led to shutdowns at some semiconductor factories. In particular, some European semiconductor companies' factories in Malaysia have been shut down, causing a shortage in semiconductor supply.

Malaysia hosts production bases of major vehicle semiconductor companies such as Germany's Infineon and Switzerland's STMicroelectronics. It is the largest vehicle semiconductor production base in Southeast Asia, with a total of 25 semiconductor suppliers gathered there.

However, last month, as COVID-19 cases surged, operations at major factories were temporarily suspended. As a result, the export volume of engine and camera semiconductors shipped to Korea this month has significantly decreased, affecting Hyundai Motor's production.

Not only Hyundai Motor but also Korea GM is experiencing damage. Korea GM plans to reduce the operating rate of its Bupyeong Plant 1 from two shifts to one shift next month due to the vehicle semiconductor supply shortage, cutting production capacity in half.

Korea GM's Bupyeong Plant 1 produces the Trailblazer, an export strategic model. The cumulative export performance of the Trailblazer in the first half of the year was 81,991 units, a 50% increase compared to the same period last year, leading to improved performance for Korea GM.

However, once the production cut at Bupyeong Plant 1 begins, damage is inevitable. A Korea GM official explained, "The semiconductor supply situation is worsening again, so we have no choice but to reduce the operating rate."

As the COVID-19 resurgence intensifies, the parts shortage is expected to prolong, raising the possibility of greater damage across the entire automotive industry. Especially as the COVID-19 situation worsens in Southeast Asia, where many global automakers' production bases are located, the overall industry damage is increasing. Japanese automaker Toyota recently suspended some lines at its major plants in Japan due to worsening parts supply conditions from Southeast Asia.

Researcher Kwon Soon-woo of SK Securities said, "Due to the recent resurgence of COVID-19, supply disruptions of vehicle semiconductors and parts originating from Southeast Asia are occurring," adding, "If prolonged, it will have a significant negative impact on the domestic automotive industry."

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