A Volkswagen plant in Dresden, Germany, on Sept. 23. The company is reducing production at facilities around the world.
Photo: filip singer/ShutterstockBERLIN— Volkswagen AG said it would cut production in the first quarter in China, Europe and North America because of a shortage of chips, the latest evidence that chip production is straining to meet demand after pandemic-related cuts earlier this year.
Global businesses have struggled to keep pace with the multispeed economic recovery across regions and industries as parts of the world slowly emerge from the pandemic, presaging what could be uneven growth next year with the potential for short-term setbacks.
China’s strong recovery since the summer has been a lifeline to Western auto makers with exposure to the world’s biggest car market. Yet it has also created unexpectedly strong demand for chips that semiconductor makers have had trouble meeting, after driving down supplies in the spring.
Now shortages that were first observed in Chinese factories have spread to the rest of the world, and car makers are beginning to respond by cutting production, which could cause ripples throughout the global economy.
“We came through the crisis well thanks to excellent management of production and materials purchasing,” said Murat Aksel, who takes over as a Volkswagen board member in charge of procurement in January. “But now we are beginning to feel the effects of the global shortage in semiconductors.”
As a result, Volkswagen is reducing production at its factories in China; Puebla, Mexico; Chattanooga, Tenn.; and its main plant in Wolfsburg, Germany, which produces its bestselling Golf model. The production stoppage affects models that use the company’s standardized passenger-car technology that is shared across the VW, Skoda, Seat and Audi brands.
General Motors Co. said it was also feeling the pinch but declined to provide any detail about the impact of the chip shortage.
“We are aware of the increased demand for semiconductor microchips as the auto industry continues its global recovery,” said David Barnas, a GM spokesman. “Our supply chain organization is working closely with the supply base to ensure adequate supply and mitigate any potential impacts on production.”
The chip shortage is affecting many global manufacturers in industries as diverse as consumer electronics, auto manufacturing and computers. Industry leaders and analysts have been warning about the bottlenecks for weeks, though they hadn’t caused production stoppages until now.
Over the past two decades the auto industry has become one of the largest consumers of computer chips, rivaling the personal computer industry, as cars become increasingly powered by software. Chips now power everything from engines and emissions control to brakes, air conditioning, raising and lowering windows and a growing array of sophisticated safety features such as automatic lane control and crash avoidance.
The first signs of trouble appeared in the fall when big chip makers such as Intel Corp. began warning of potential production bottlenecks as the industry was struggling to keep up with a broad recovery in global manufacturing. Shortages in the auto industry were first noticed in China, where manufacturers depend on imports.
“[The situation is] getting more critical as demand has risen due to the full-speed recovery of the Chinese market,” a China representative of Volkswagen, whose supply of certain auto electronic components has been affected, told The Wall Street Journal in an email.
Officials from Chinese industry bodies have confirmed the short supply but denied the market would see a large-scale halt in production.
“The production of some car makers may be greatly affected in the first quarter of next year,” Li Shaohua, vice secretary-general of the government-backed China Association of Automobile Manufacturers, told the group’s publication AutoReview. “The impact, however, won’t be significant for the whole of next year.”
A handful of suppliers from Europe, Japan and the U.S. dominate the global auto-chip market, while China largely relies on imports. Supplies from leading auto chip makers including Infineon Technologies, NXP Semiconductors and Micron Technology account for two-thirds of the Chinese market, research firm Strategy Analytics has estimated.
“ ‘Chips are the new oxygen.’ ”
“Any large auto maker will need to focus on establishing a reliable supply of chips for 2021,” said Thilo Koslowski, an independent auto-technology consultant. “Especially auto makers with a European supplier base that have a large market share in China will be challenged by this.”
One-off factors have also intensified the problem. Recent strikes at STMicroelectronics ’ French sites and a fire at an Asahi Kasei Microdevices factory in Nobeoka, Japan, have disrupted their chip deliveries. The two companies are among Chinese auto makers’ top suppliers.
“Our operations in Crolles have been and continue to run on nominal values with no supply-chain impacts,” a STMicroelectronics spokesperson said.
Connected vehicles and self-driving cars rely on advanced electronics. Analysts have warned that a bottleneck in the type of semiconductors that China isn’t producing itself could hold back the country’s ambitions in the market for next-generation vehicles.
“Chips are the new oxygen,” said Michael Dunne, chief executive of automotive consulting firm ZoZo Go. “Access to chips could become an existential risk for China’s premium electric and connected car makers as their sales numbers expand.”
—Yoko Kubota in Beijing
and Mike Colias in Detroit contributed to this article.
Write to William Boston at william.boston@wsj.com
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the December 19, 2020, print edition as 'Chip Shortage Slows Auto Recovery.'
The Link LonkDecember 19, 2020 at 05:08AM
https://ift.tt/2K8bItJ
Chip Shortage Slows Global Auto Recovery - The Wall Street Journal
https://ift.tt/2RGyUAH
Chips
No comments:
Post a Comment