The Car Semiconductor Crisis Holding Up Automakers Until the Last Moment

[Asia Economy Reporter Yu Je-hoon] The shortage of automotive semiconductors that struck this year continues to hamper domestic and international automakers until the final stages. Industry insiders believe that the supply shortage is likely to persist for some time, as it is influenced not only by short-term variables such as supply disruptions caused by COVID-19 but also by medium- to long-term factors like electrification and autonomous driving.

According to the industry on the 30th, Hyundai Motor Company sold 898,906 units (based on wholesale sales) domestically and internationally in the third quarter. This figure represents a 9.9% decrease compared to the same period last year. Kia also saw its sales fall to 684,413 units, down 2.1% year-on-year.

The situation is similar for other companies. In the case of Korea GM, last month's sales remained at 13,750 units, a 66.1% decrease compared to the same month last year. This far exceeds the cumulative sales decline rate of 24.5% from January to September this year. Among automakers, only Renault Samsung Motors, which recently began exporting the XM3 to Europe in earnest, managed to maintain its reputation by showing double-digit growth.

The poor production and sales performance of automakers in the second half of the year is also due to the automotive semiconductor shortage. The industry initially predicted that the supply shortage would ease somewhat in the second half of this year, but the rapid spread of the COVID-19 Delta variant in Southeast Asia forced them to face supply difficulties again.

This is not just a problem for the domestic automotive industry. Toyota, which was known to have relatively coped well with the semiconductor shortage along with Hyundai and Kia, also cut production by about 400,000 units last month, equivalent to 40% of its monthly output, due to the prolonged shortage and the impact of the Delta variant hitting Southeast Asia. Additionally, foreign automakers such as Volkswagen, Stellantis, General Motors (GM), and Honda are all experiencing production disruptions and performance declines due to the automotive semiconductor shortage.

However, the industry expects the impact of the semiconductor shortage to continue until the end of this year. Although the spread of COVID-19 in Southeast Asia, which was a major issue, has calmed down, the bottlenecks caused by production stoppages and resumptions are unlikely to be resolved quickly.

Seo Kang-hyun, Vice President and Head of Planning and Finance at Hyundai Motor Company, recently stated in a conference call, "Although the spread of COVID-19 in Southeast Asia has slowed down after September, additional time is expected before semiconductor manufacturers' production lines return to normal." He added, "Therefore, supply disruptions are expected to continue in the fourth quarter, and some effects are likely to persist into next year."

Some experts believe that tight supply conditions may continue in the future. While the supply shortage causing production disruptions is expected to gradually ease, the demand for semiconductors is increasing due to electrification and autonomous driving, so unstable conditions may persist. An industry insider said, "Global semiconductor manufacturers are massively expanding production facilities, but it will take more time to establish mass production systems. Meanwhile, the pace of electrification is accelerating, so the possibility of a prolonged supply shortage cannot be ruled out."

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