In a prior Supply Chain Matters blog commentary, we highlighted growing signs of supplier strain and elongated lead times as beginning to be evident across global supply networks. One current example are a growing shortage of semiconductor chips utilized to control automotive vehicle control systems now reportedly impacting global auto producers, forcing many to cutback on planned production schedules.

The latest involves Honda Motor which reportedly reduce Japan based production by 4000 units in January according to a report by Nikkei Business.  Last month, leading global automotive producer Volkswagen AG indicated that it would reduce production levels for the first quarter for factories located in China, Europe and North America because of such chip shortages.  According to reporting by The Wall Street Journal, General Motors indicated it was also dealing with a supply constraint by declined to comment further.

While such component shortages are not forcing temporary production suspensions, they are reportedly constraining planned production output levels.

The auto industry focused shortages were reportedly first noticed in China, where domestic auto demand levels have remained robust. Automakers in the country mostly have dependence on imported semiconductor chips and system components. According to Nikkei reporting, the coronavirus pandemic initially impacted global auto demand levels in the first half of 2020. As more global populations were confined to have to work from personal residences, demand for personal computers, smartphones, gaming consoles and other consumer electronics caused semiconductor producers to shift supply to these markets. A further contributing factor was an October fire at a Japan based microdevices plant that produced audio chips and components, and a labor strike involving STMicroelectronics production facilities in France.

Reportedly, warnings of potential semiconductor shortages have been circulating within the industry for weeks, but the situation has now become more visible.

With so many newer automobiles value-added content including electronics and onboard control and navigation systems, supply shortages involving consumer electronics supply networks have direct impacts on automotive. With new concentrations on electric powered vehicles, the dependency grows ever larger.

 

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