The Global Auto Plants Now Idle as Chip Supplies Dry Up

(Bloomberg) -- Many of the world’s biggest automakers are suspending operations at their factories in Asia, Europe and North America due to a persistent shortage of semiconductors that was exacerbated by a fire at a key chip-producing plant over the weekend.

Ford Motor Co., Toyota Motor Corp., Volkswagen AG and Honda Motor Co. are among those affected by problems with the supply of semiconductors, which are used in vehicles to manage and monitor everything from engine and driving performance to air-conditioning and entertainment systems.

“Production is really vulnerable right now,” Bloomberg Intelligence auto-industry analyst Tatsuo Yoshida said. “Any kind of abnormal occurrence causes parts to run out.”

The shortage initially came about as rising demand for cars coincided with a boom in the market for devices such as laptops, webcams and gaming systems as people spent longer at home due to the pandemic. That diverted chips away from the auto industry, which had earlier slashed orders after Covid-19 caused their sales to collapse. Winter storms in the U.S. also affected semiconductor supplies, and then the situation worsened this week after a fire damaged a plant run by Renesas Electronics Corp., a top provider of automotive chips.

Analysts at Mitsubishi UFJ Morgan Stanley Securities Co. already estimated in January that the shortage would reduce global vehicle production by 1.5 million units, with Japanese automakers accounting for roughly a third of that total.

Here are some of the latest stoppages by automakers:

With the exception of Volkswagen, the share prices of all of those automakers have fallen this week, tracking declines in the S&P Supercomposite Auto Parts & Equipment Index, which is down 10% from a March 17 peak.

The Renesas fire will halt a production line for 300mm wafers for at least a month and probably have a big impact on the car industry, Chief Executive Officer Hidetoshi Shibata said during an online news conference Sunday. Underscoring the severity of the outage, Toyota and Nissan dispatched workers to help in recovery efforts.

“The automotive industry is key in Japan, therefore any incident that impacts it has a broad effect on the economy,” said Roman Schorr, a director at Fitch Ratings. With the added variable of a chip crunch, “it’s certainly striking that so much right now hinges on one factory,” he said.

Shibata will join executives from Tokyo Electron Ltd. and Kioxia Holdings Corp., as well as representatives from the auto sector, at meeting with Japan’s economy ministry later Wednesday.

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