How US-China trade war could damage auto industry: Former Toyota exec
Trump's tech war with China is turning against automakers as they run out of microchip stocks.
Automakers around the world are closing assembly lines due to global microchip shortages, exacerbated in some cases by administration action, industry officials said. Donald trump against key Chinese chip factories.
A deficit that has caught much of the industry by surprise and could continue for months is now forcing Ford Motor Co, Subaru Corp and Toyota Motor Corp to cut production in the United States..
Affected automakers in other markets – Volkswagen, Nissan Motor Co Ltd and Fiat Chrysler Automobiles.
Problems arise from a confluence of factors as car manufacturers compete with the sprawling consumer electronics industry for the supply of microchips. During the pandemic, consumers were buying up laptops, game consoles and other electronic products, resulting in limited supply of chips throughout 2020..
Consumers also bought more cars last spring than industry anticipated, making supply even more difficult..
In at least one case, the shortage stems from President Donald Trump's policies to reduce technology transfer to China..
One automaker moved microchip production from China's Semiconductor Manufacturing International, or SMIC, which was subject to US government restrictions in December, to Taiwan Semiconductor Manufacturing Co in Taiwan, which in turn was unable to keep up with the increased order volume, an insider told Reuters … a source.
Car Supplier Confirms TSMC Cannot Meet Demand.
«The systemic aspect of the crisis is giving us a headache, ”said one executive at the supplier, who asked not to be named. – In some cases, we find spare parts that could make us independent of TSMC, only to find that an alternative manufacturer does not have the available capacity».
During a conversation with investors on Thursday, TSMC CEO Kay xi wei said there is a shortage of automotive chips made using «the latest technologies», and that the company works with clients to «mitigate the effects of a deficit».
The absence of just one tiny chip is enough to stop production: Ford's Kentucky plant, which makes the Escape SUV, is idling due to a chip shortage in the car's braking system, a union spokesman said at the plant..
Ford will suspend operations at its Focus plant in Saarlouis, Germany for a month due to chip shortages starting next week.
The situation is unlikely to improve quickly, as all microchips for both laptops and Lexus luxury cars start out as silicon wafers, which take about 90 days to recycle..
The microchip industry has always struggled to keep up with sudden surges in demand. Plants cost tens of billions of dollars to build and expand capacity can take up to a year to test and validate sophisticated tools.
«In general, demand has grown by about 50%. And there is no other industry as resource intensive as ours with 50% productivity», – said Mike Hogan, senior vice president of chipmaker GlobalFoundries and head of its automotive division.
Capacity shortages and skyrocketing demand have prevented chipmakers from weathering two shocks from the Trump administration.
First, the White House in September banned Huawei Technologies Co Ltd, a Chinese telecommunications giant and major smartphone maker, from buying chips made using American technology. Huawei stockpiled chips ahead of the ban in order to continue to create products that could be used after it went into effect. Analysts say Huawei's rivals have also begun buying chips in hopes of gaining market share..
Second, the US government passed regulations prohibiting SMIC from using some American chip making tools, and the move prompted at least some SMIC customers to look for other chip factories due to concerns that production might be halted..
«There are concerns about using a Chinese chip factory if the United States is going to include them on the legal entity sanctions list.», – said Daniel goel, Commercial Director of UltraSense Systems, keeping in mind possible further restrictions.
A Commerce Department spokesman declined to comment on the implications of SMIC and Huawei's blacklisting on the automotive sector, but said the top priority was «ensuring that the export control ordinance protects the national security, economic security, and foreign policy interests of the United States».
Analysts believe the car chip shortage is likely to persist for six months. The global auto industry has already lost 202,000 vehicles as of January 13, according to a report by AutoForecast Solutions..
Automakers and supplier executives said they are adapting production schedules to protect chips used in more profitable cars. Companies are increasingly looking to buy chips from more suppliers and increase inventory in the future..