Toyota and Honda close US plants as perfect storm disrupts supply chains

Separately, Samsung, the world’s largest smartphone maker, said a severe global chip shortage would hurt its business in the next quarter. The South Korean company also said it could refuse to launch a new model of one of its most popular devices, although it said the aim of the change was to prevent it from competing with an existing device.

The outages underscore how a series of forces are coming together to tighten supply chains around the world: from the pandemic increase in consumer demand for technology products to an accumulation of imports in congested ports in California and factory disruptions in the U.S. caused by harsh climate. The timing is particularly worrying for manufacturers because the United States and some other economies are starting to reopen thanks to vaccination campaigns.

“Automotive companies initially had to bear the brunt of this scarcity, but now it has spread to virtually every part of the consumer electronics industry,” said Sanjeev Rana, senior analyst at investment bank CLSA in Seoul.

Semiconductors have been in short supply for months after manufacturers of smartphones, PCs, tablets and TVs underestimated expectations during the pandemic, before increasing orders that caught chip makers unprepared.

Widening the deficit was last month’s severe winter weather in the central US. Samsung, also one of the world’s largest chipmakers, was forced to shut down two chip factories in Austin, Texas, last month. The facilities represent about 28% of Samsung’s total production, according to Citi analysts, and remained closed until Wednesday. Dutch chip maker NXP Semiconductors NV has also reduced work at two facilities in Austin because of the harsh climate, although production resumed last week.

Toyota said on Wednesday that the lack of petrochemicals was responsible for shutting down production at its Kentucky plant, where it builds the Camry and Avalon sedans and the hybrid version of its RAV4 sport utility vehicle. The scarcity would also lead to cuts in the production of his Tacoma truck built in Mexico. The company did not expect to lay off any workers for the time being.

Honda said it will halt production at most of its auto plants in the United States and Canada next week because of a combination of supply chain problems, including port delays that delayed parts delivery, chip shortages and severe weather. in the United States. caused pipes to rupture in some of its factories, impairing its ability to get back up and running, the company said.

The shutdown is scheduled to start at most of Honda’s five auto plants in the United States and Canada on March 22 and last for a week, the company said, without specifying which plants would halt production. Honda said the duration of the shutdown could change depending on the parts supply. Workers will continue to be paid to carry out other tasks at the factories, he said.

The problems are the latest in a series of recent problems for the automotive industry. General Motors Co.

, Ford Motor Co.

and Nissan Motor Co.

all announced production cuts or temporary plant shutdowns due to chip shortages. Congested ports in Los Angeles and Long Beach, California, are a particular problem for Asian auto manufacturers who import used parts from their factories in the United States.

Volkswagen AG

He said he was dealing with a large backlog of unbuilding vehicles, caused by the lack of chips and the blizzards in Texas. The German automaker said in response to questions from The Wall Street Journal that it would try to catch up on its vehicle production in the second half of the year.

Meanwhile, chip makers like Taiwan Semiconductor Manufacturing Corp.

reached production limits, with the company injecting billions of dollars in new capacity to meet demand.

Koh Dong-jin, co-CEO of Samsung, told investors on Wednesday that dealing with the chip supply and demand imbalance has become a priority for the team. He said executives were traveling abroad, despite travel restrictions, to discuss the matter with business partners.

Koh also said the company was considering not launching a new Galaxy Note smartphone this year, one of the company’s most popular products, although he said any delay would be driven more by concerns that the model could compete with a device launched with similar features. earlier this year

Demand for many electronics exceeded expectations last year. For example, PC shipments increased 13% last year, according to research firm IDC, the fastest growing pace in 10 years. Smartphone shipments fell 5.9%, but IDC and other companies predicted sharper declines earlier this year.

“When Covid-19 was launched in the first half of last year, many of these manufacturers, like everyone else, thought the global economy would sink,” said RSA, of CLSA. Instead, “all of the expenditures that were earmarked for tourism, etc., went to these devices, and companies were not ready for this increase in demand.”

Write to Sean McLain at [email protected]