Select Page

Chip shortages still plague Toyota, some other auto makers | Mint – Mint

by Nov 10, 2022Blog0 comments

Japanese car maker trims full-year production plan by 500,000 vehicles, although it foresees record output
TOKYO : Overall demand for semiconductors may be softening, but the world’s biggest auto maker says it still can’t get its hands on enough chips.
Toyota Motor Corp. on Tuesday lowered its Toyota and Lexus production target for the current fiscal year through March to 9.2 million units from a previous goal of 9.7 million, citing the risk of chip-supply issues.
The situation reflects prolonged underinvestment in certain older types of chips that are particularly needed by car makers. While slowing demand for smartphones and personal computers has eased shortages of memory and other chips and sparked fears of a glut, pockets of constrained supply remain.
Analysts and chip executives say the supply-demand mismatch could drag on for years.
“If we look at each type of semiconductor, the supplies haven’t recovered to a satisfactory level,” said Kazunari Kumakura, Toyota’s head of purchasing.
Auto makers globally have been grappling with a shortage of semiconductors since late 2020, when a rebound in auto sales took companies by surprise after they had previously moved to reduce chip orders. Auto makers competed for limited supply against electronics companies that saw demand bolstered by stay-at-home consumers.
That demand has now eased, and smartphone sales are falling. The car market, meanwhile, has remained relatively strong.
Toyota’s Mr. Kumakura said supply conditions have relaxed for certain types of chips that are used by both the automotive and consumer-electronics industries. “Overall, we have emerged from the worst of the situation,” he said. The 9.2 million vehicle forecast would represent an annual record if achieved.
U.S. auto makers also expressed optimism about the chip situation in recent quarterly reports. “Overall, I would say chips are getting better than certainly where they were a year ago,” General Motors Co. Chief Financial Officer Paul Jacobson said last week.
Still, analysts say the auto industry isn’t yet near the end of its problems, and some might even worsen.
The problems particularly involve analog chips, which use older technology processing information with gradations, unlike digital chips that differentiate only between on and off signals. Executives at other Japanese auto makers have also said they are grappling with a tight supply of legacy chips.
Cars use hundreds of analog semiconductors for purposes such as moderating how much power is drawn from a battery, yet new investment has largely been funneled into developing more advanced chips.
A McKinsey & Co. report in October said that while manufacturers are trying to squeeze out more production of the legacy semiconductors, they are unlikely to keep up with demand through 2026. That is partly because of the rise of electric and hybrid vehicles that rely more on the chips, McKinsey said.
One of the biggest analog chip makers, STMicroelectronics NV, said late last month that its backlog of automotive orders remains well above current and planned manufacturing capacity through 2023.
Another analog chip giant, Texas Instruments Inc., is working to add capacity, yet inventory has been increasing slowly and still stands below desired levels, Chief Financial Officer Rafael Lizardi said in an earnings call last week.
Some Japanese auto-industry executives have highlighted the Dallas-based company as a source of current supply bottlenecks. A Texas Instruments representative said the company was working closely with customers to get them the parts they need and had a road map to build semiconductor capacity for decades to come.
Toyota’s current shortages are caused by chip makers having failed to increase capital investment in certain products, Mr. Kumakura said, without naming specific suppliers or types of chips. Due to the nature of vehicles today, “even if it’s just one type of semiconductor that’s in short supply, a car can’t be built,” Mr. Kumakura said.
Toyota said last month it would temporarily give buyers of some models in Japan one smart key instead of two to help ration supplies.
Download the Mint app and read premium stories
Log in to our website to save your bookmarks. It’ll just take a moment.
You are just one step away from creating your watchlist!
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
Your session has expired, please login again.
You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.
This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp