"Car Semiconductor Crisis Can Recur Anytime, Fundamental Measures Needed"

Fostering Global Automotive Semiconductor Companies and the Need for Fundamental Supply Chain Restructuring

Source: Korea Automotive Technology Institute

[Asia Economy Reporter Changhwan Lee] The prolonged and potentially recurring shortage of automotive semiconductors threatening global car manufacturers calls for fundamental measures from the government and industry. Analysts emphasize the need to nurture global automotive semiconductor companies and fundamentally restructure supply chains considering geopolitical factors.

On the 18th, the Korea Automotive Technology Institute published a report titled "Future Semiconductor Supply Shortage Response Directions Based on the Toyota Case," stating that automotive semiconductor supply showed a temporary recovery after the first supply shortage caused by demand forecasting failures and a lack of microcontroller units (MCUs). However, the recent spread of COVID-19 in Southeast Asia triggered a second supply shortage, intensifying the impact.

The institute explained that Malaysia, where semiconductor back-end processing is concentrated, has experienced repeated factory shutdowns since the first nationwide lockdown in June, and semiconductor production plants in Vietnam and Thailand have also shut down consecutively, paralyzing the global supply chain.

In particular, Malaysia is a crucial production base accounting for 13% of the world's semiconductor packaging and testing processes, hosting local factories of over 50 global semiconductor companies, which has caused significant damage to the automotive industry, the institute claimed.

Meanwhile, Japan's Toyota Motor Corporation demonstrated increased production during the first supply shortage through risk management and strategic investment following the Great East Japan Earthquake, the institute emphasized. This is attributed to Toyota's close cooperation with domestic automotive semiconductor manufacturers like Renesas, supported by government assistance.

However, as the supply shortage prolonged, Toyota recently depleted its stockpiled inventory and, compounded by damages in Southeast Asia, reduced production by 400,000 units last month, about 40% of its monthly output, the report added.

The institute stated that South Korea also needs to nurture automotive semiconductor companies and advance its supply chain to prepare for future additional supply shortages.

Senior Researcher Hongchang Jang of the Korea Automotive Technology Institute said, "It is necessary to foster domestic global automotive semiconductors that can prioritize cooperation even during supply crises," adding, "Managing all subordinate component information and upgrading systems for rapid evaluation and application of substitutes are also important."

Researcher Jang also mentioned, "At the national level, it is essential to establish a parts supply ecosystem that comprehensively considers strategies and risk factors among regions and companies."

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