Toyota, Honda close US factories as perfect storm breaks supply chains

Separately, Samsung, the world’s largest maker of smartphones, said a severe global shortage of chips would hurt its business in the next quarter. The South Korean company also said it would be possible to launch a new model of one of its most popular devices, although it said the move was aimed at preventing it from competing with an existing device .

The disruptions highlight how a number of forces are working together to displace the world’s supply chains: from the pandemic – driven increase in consumer demand for technological goods to a backlog of imports in clogged ports in California and U.S. factory outages due to severe weather. The timing is particularly important for manufacturers as the US and some other economies begin to reopen thanks to vaccination campaigns.

“Automotive companies initially had to bear the brunt of these shortages, but now they have spread to virtually all parts of the consumer electronics sector,” said Sanjeev Rana, senior analyst at investment bank CLSA in Seoul.

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

The strengthening of the shortage was that the severe winter weather last month in the central US, Samsung, also one of the world’s largest manufacturers of chips, had to idle two chip factories in Austin, Texas, last month. According to Citi analysts, the facilities represent about 28% of Samsung’s total production and closed on Wednesday. Dutch chipmaker NXP Semiconductors NV also reduced work at two facilities in Austin due to severe weather, although production resumed last week.

Toyota said Wednesday that the shortage of petrochemicals was to blame for production at the plant in Kentucky, where it is building the Camry and Avalon sedans and the hybrid version of its RAV4 sports utility vehicle. The shortage would also lead to the production cuts of his Tacoma pickup built in Mexico. For the time being, the company did not expect to enter workers.

Honda said it would halt production at most of its U.S. and Canadian car factories next week due to the combination of supply chain issues, including port backlogs that delayed parts delivery, lack of chips and heavy again in the US cold temperatures. caused pipes to burst in some of its factories, hampering their ability to get back on track, the company said.

The company will launch at most of Honda’s five car plants in the US and Canada on March 22 and last a week, the company said without specifying which plants will stop production. Honda said the duration of the standstill could change depending on parts. Employees are still paid to perform other tasks at the plants.

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

, Ford Motor Co.

a Nissan Engine Co.

all announced production cuts or temporary shutdowns of the plant due to the scarcity of chips. Fixed ports in Los Angeles and Long Beach, California, are a particular problem for Asian carmakers importing parts used in their U.S. factories.

Volkswagen AG

said it was due to a large backlog of unbuilt vehicles caused by both the shortage of chips and the blizzards in Texas. The German carmaker said in response to questions from The Wall Street Journal that it would try to catch up with its vehicle production in the second half of the year.

Meanwhile, chipmakers like Taiwan Semiconductor Manufacturing Corp.

production limits, with the company pouring billions of dollars into new capacity to keep up with demand.

Koh Dong-jin, co-CEO of Samsung, told investors on Wednesday that dealing with the demand and imbalance in chips has become a priority for staff. He said managers travel overseas, despite travel restrictions, to discuss the matter with business partners.

Mr. Koh also said the company is considering not launching a new Galaxy Note smartphone, one of the company’s most popular products. similar features earlier this year

The demand for many electronics exceeded expectations last year. According to PC, the research firm IDC has increased the fastest growth rate in ten years by 13%. Smartphone shipments fell 5.9%, but IDC and other companies predicted earlier in the year that the decline would be stronger.

“When Covid-19 launched in the first half of last year, many of these manufacturers, like everyone else, thought the world economy was going to tank,” he said. Rana, CLSA, said. Instead, ‘all the expenses spent on tourism, and so on, and companies were not ready for this.’

Write to Sean McLain by [email protected]