Toyota and Honda close US factories as perfect storm disrupts supply chain

Besides, Samsung, the world’s largest smartphone maker, said a severe global shortage of chips would hurt its business over the next quarter. The South Korean company also said it could hold back the launch of a new model of one of its most popular phones, though it said the measure was aimed at preventing it from competing with an existing phone.

The disruptions highlight how various forces are joining forces to squeeze global supply chains: from rising consumer demand for technology products driven by a pandemic to an accumulation of imports in California ports clogged and factory shutdowns in the United States caused by severe weather. The timing is especially worrying for manufacturers as the United States and some other economies begin to open up thanks to vaccination campaigns.

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

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

Samsung, also one of the world’s largest chip makers, was forced to leave two chip factories in Austin, Texas, last month. The facilities account for about 28% of Samsung’s total production, according to Citi analysts, and remained closed as of Wednesday. Dutch chip maker NXP Semiconductors NV also reduced work at two facilities in Austin due to the severe weather, although production resumed last week.

Toyota said Wednesday that the shortage of petrochemicals was to blame for a shutdown in production at its Kentucky plant, where it manufactures Camry and Avalon sedans and the hybrid version of its RAV4 sports utility vehicle. The shortage would also lead to cuts in the production of its Tacoma van built in Mexico. The company did not expect any workers at this time.

Honda said it would stop production at most of its U.S. and Canadian auto factories next week due to the combination of supply chain-related problems, including port delays that have delayed parts delivery. , lack of chips and severe weather in the cold temperatures of the United States. it had caused pipes to explode in some of its factories, hampering its ability to operate again, the company said.

The closure is scheduled to begin at most of Honda’s five car plants in the United States and Canada on March 22 and last a week, the company said, without specifying which plants would stop production. Honda said the duration of the shutdown could change depending on the supply of parts. According to the document, workers will continue to be charged for other tasks at the plants.

Problems are the latest problems in the automotive industry. General Motors Co.

, Ford Motor Co.

and Nissan Motor Co.

have announced production cuts or temporary plant shutdowns due to chip shortages. The congested ports of Los Angeles and Long Beach, California, are particularly a problem for Asian carmakers who import used parts into their U.S. factories.

Volkswagen AG

he said he was facing a huge buildup of unbuilt vehicles caused by the shortage of chips and the Texas riots. The German carmaker answered questions from the Wall Street Journal that it would try to regain vehicle production during the second half of the year.

Meanwhile, chip manufacturers such as Taiwan Semiconductor Manufacturing Corp.

they have reached production limits, with the company investing billions of dollars in new capacities to keep up with demand.

Koh Dong-jin, co-CEO of Samsung, told investors on Wednesday that tackling the imbalance between demand and supply for chips had become a priority for staff. He said executives were traveling abroad, despite travel restrictions, to discuss the issue 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, though he said the delay would be further motivated by concerns that the model would compete. with a phone that launched with similar features earlier this year

Demand for many electronics exceeded last year’s expectations. For example, PC shipments increased 13% last year, according to research firm IDC, the fastest-growing rate in ten years. Smartphone shipments fell 5.9%, but IDC and other companies had forecast stronger declines earlier this year.

“When Covid-19 arrived in the first half of last year, many of these manufactures, like everyone else, thought the world economy was going to shut down,” said RSA, of CLSA. Instead, “all the expenditure that went to tourism, etc., went to these devices and companies were not prepared for this increase in demand.”

Write to Sean McLain to [email protected]