Concerns Grow Over Auto Industry Q3 Earnings Amid Semiconductor Shock

COVID-19 Spread, Ongoing Vehicle Semiconductor Supply Shortage from Southeast Asia

[Asia Economy Reporter Changhwan Lee] As the supply shortage of automotive semiconductors originating from Southeast Asia continues due to the spread of COVID-19, concerns over the automotive industry's performance have increased. Third-quarter earnings are expected to fall short of market expectations, and some forecasts express worries that this trend may continue into the fourth quarter.

According to the automotive industry on the 13th, domestic automakers such as Hyundai Motor and Kia are significantly adjusting vehicle production volumes due to the shortage of automotive semiconductors. It is understood that some production lines are continuing to operate with empty conveyor belts, known as gongpichi.

In the worst case, there are forecasts that the factory shutdown incidents that occurred earlier this year could reignite. Toyota has already suspended operations at major domestic plants in Japan for at least two weeks starting this month due to semiconductor shortages.

American General Motors (GM) has also temporarily halted production lines at six North American plants, including those in Fort Wayne, Indiana, and Wentzville, Missouri. As a result, GM Korea has reduced production by 50% at its Incheon Bupyeong Plant 1 and Plant 2 starting this month.

Domestic automakers are also suffering damage. Hyundai Motor's Asan Plant in Chungnam, which produces the Grandeur and Sonata, halted operations from the 9th to the 10th, and Kia's plant in Georgia, USA, stopped production for one day on the 7th.

The industry initially expected the semiconductor supply situation to improve in the third quarter. This was because major semiconductor companies had been continuously increasing production as the supply shortage prolonged. However, the spread of COVID-19 in Southeast Asia, where semiconductor manufacturing plants are concentrated, disrupted these expectations.

In particular, production has been severely disrupted as manufacturing plants in Malaysia have shut down due to COVID-19. Malaysia hosts production bases of major automotive semiconductor companies such as Germany's Infineon and Switzerland's STMicroelectronics. It is the largest automotive semiconductor production base in Southeast Asia, with a total of 25 semiconductor suppliers gathered there.

Kim Minseon, a researcher at Kiwoom Securities, said, "The automotive semiconductor supply shortage has been prolonged due to the spread of COVID-19 in the Southeast Asia region, which is expected to have some impact on third-quarter sales," adding, "Once the COVID-19 situation in Southeast Asia calms down, full-scale production increases after November will help make up for the lost volume."

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