Chip shortages are spreading from the automotive industry to consumer electronics

The impact of chip shortages on the automotive manufacturing industry is intensifying.

According to Japanese media reports, Honda's main factory in Mie Prefecture, Japan will shut down for five days in early February. The factory's main products are two of its best-selling sedans.

Honda has reduced production at its other domestic plants as well as at plants in Canada and the United States throughout January, although the company did not disclose the extent of the reductions.

Mazda will also cut production at several plants around the world next month. Toyota, Nissan and Subaru have also recently cut production.

So far, at least five Japanese automakers have reduced their car production due to the chip shortage.

The impact of shortages on the automobile market

Japan's Mitsubishi UFJ Morgan Stanley Securities recently released a report saying that the chip shortage is expected to cause Japanese automakers to cut production by about 500,000 vehicles, accounting for one-third of the total global production cuts.

In addition to production cuts, what makes the situation worse for Japanese automakers is that automotive chip manufacturers are raising product prices. Among them, Renesas Electronics, one of Japan's major chip manufacturers, has already raised prices, and Toshiba will also increase product prices.

According to Taiwan's Commercial Times, there is a shortage of automotive chips. TSMC and UMC are urgently allocating production capacity to produce automotive chips on a "super hot run". It is reported that international automotive chip manufacturers are asking wafer foundries to increase prices by 25% to 30% in order to obtain more supply. Industry insiders revealed that it is extremely difficult to jump the queue and occupy production capacity at present, but we are now in the second quarter wafer foundry capacity communication period. The price increase by automotive manufacturers has once again raised the market price. The second quarter wafer foundry price is expected to rise further, and there will be a greater capacity crowding-out effect.

Abrams, head of equity research at Credit Suisse, said that the automotive industry is currently facing a global supply shortage. Due to customer order cuts, chip manufacturers cut production in the middle of last year, which has led to a serious shortage of supply. For automakers, chip supply has become a major bottleneck restricting production. Due to the lack of key chips, some cars cannot be produced now. Chip manufacturers may catch up with production schedules by the middle of this year, but it may take several quarters to fully meet current market demand.

Abrams said the current industry shortage highlights the "strategic importance" of chip supply, and this is the first time the automotive industry has faced a situation where chip supply has restricted car manufacturing. At the same time, there are very few chip foundries with advanced processes in the world. In addition to TSMC, the only companies that currently have advanced automotive chip manufacturing technology are Samsung Electronics and Intel.

German auto parts supplier Continental said that although manufacturers have responded to the recent surge in demand by expanding production capacity, the additional supply required by the market will take 6-9 months to complete, so potential supply bottlenecks may continue until 2021.

Samsung warns: Chip shortages spread to smartphones and tablets

The rapid development of intelligent and connected automotive technology has led automakers to compete with consumer electronics companies for chip manufacturing capacity.

Samsung recently issued a warning: The global semiconductor shortage is not only impacting automakers, but is also disrupting the manufacturing of smartphone chips, which will affect the delivery of smartphones and tablets.

Samsung said that chip manufacturers are currently eager to meet the needs of automakers, and many chip foundries are operating at full capacity, which limits the foundries' ability to accept new orders, affecting the foundries' manufacturing of DRAM and NAND chips, which in turn impacts the delivery of smartphones and tablets.

Han Jinman, executive vice president of Samsung's memory business, said the chip foundry shortage is already a global problem and the company is closely monitoring the impact.

Regarding the overall trend of the chip industry this year, Macquarie predicts that chip prices may not rise as fast this year as in 2017-2018, but will rise steadily and last longer.