Impact of global chip shortage on carmakers spreading across Eastern Europe, Turkey and Central Asia

Impact of global chip shortage on carmakers spreading across Eastern Europe, Turkey and Central Asia
Audi Hungaria was one of the first automakers in Europe to report production disruption caused by the chip squeeze. / Lemon3, CC-BY-SA 3.0
By bne IntelIiNews March 26, 2021

The global semiconductor chip shortage has so far hit manufacturing at automakers in countries including Romania, Turkey, the Czech Republic, Hungary and Uzbekistan, bne IntelliNews reports show.

The scarcity of chips has been caused by factors including a pandemic-led surge in demand for phones, TVs and gaming consoles from populations locked down under coronavirus restrictions. The situation lately prompted US President Joe Biden to sign an executive order as he pledged to seek $37bn in funding in line with legislation to supercharge American chip production.

Here is a list of some of the companies known to have been impacted by the crisis:

Romania

This week, French group Renault announced another seven outage days at its Dacia car plant in Romania. A lack of semiconductors has caused interruptions at the plant since February.

"The company makes every effort to limit the impact [of the semiconductors crisis] on production. It is estimated that the peak of this deficit of electronic components could be in the second quarter. The group's latest estimate, globally, taking into account a production recovery in the second half, assesses the risk of approximately 100,000 vehicles for the current year," announced Dacia.

Czech Republic

Toyota Motor Manufacturing Czech Republic suspended its car production in Kolin for 14 days from March 22 due to insufficient stocks of semiconductors. It said some semiconductor shipments were held up because of snowstorms in Texas.

The same problem was reported by Volkswagen-owned Czech car maker Skoda Auto. It said its production was being reduced and deliveries of new cars were slowing. 

Toyota has eight plants in the EU.

Turkey

Turkish automaker Oyak Renault on March 9 announced that it would halt production at a plant that produces Clio and Megane models from March 15 to March 22 because of the global chip shortage.

As Oyak Renault’s stoppage got under way, Turkish automaker Tofas. owned jointly by local conglomerate Koc Holding and Fiat Chrysler Automobiles, announced in a Borsa Istanbul filing that it would suspend production from March 19 to April 5 due to chip supply problems.

Tofas said the company has been impacted by the chip deficit “due to the high technology in its products, the increasing use of electronic composition and the world-integrated production system”.

Analysts said that if the chip crisis spread to other carmakers in Turkey, damage would be felt in the macroeconomy. Automotive is Turkey’s largest export industry.

Hungary

In Hungary, reports began to emerge as early as mid-January of disruption caused to automaking by the dearth of chips.

Mercedes-Benz Manufacturing Hungary halted production at its factory for 10 days at the end of January.

Also at the end of January, German carmaker Audi's base in Hungary returned to three shifts after reducing the number to just one for nearly two weeks because of the semiconductor squeeze.

Audi Hungaria said global demand for semiconductors had increased by such a scale that parts deliveries failed to arrive or came late. The auto-chip shortage stemmed from overly conservative demand estimates made by carmakers, while chip manufacturers allocated more capacity to meet soaring demand from consumer electronics makers, it added.

On March 12, data from Hungary’s Central Statistics Office (KSH) on March 12 showed the output of the country’s automotive industry fell 27.5% y/y in January due to the scaled back production. The sector accounted for 25% of Hungary’s total manufacturing output in the month.

Uzbekistan

Sole Uzbek car manufacturer UzAuto Motors on March 2 said it planned to delay delivery times on manufactured vehicles by up to two months because of the impact on production of the worldwide shortage of semiconductors.

Production plans for the second quarter have been affected, the state-owned company said.

UzAuto Motors makes Chevrolet cars under a deal with US giant General Motors.

“GM's Global Supply Chain Management works closely with suppliers to find solutions to their semiconductor requirements and mitigate the impact on GM and its partners, including UzAuto Motors. Our intention is to cover as many production losses as possible at each facility, " said Christian Sommer, GM's president and managing director of strategic markets, alliances and distributors. He said he anticipated that the situation would stablise in the second half of this year.

EU's ambitious target

The BBC has reported  that the European Commission has set an ambitious target to boost production of cutting-edge computer chips by the end of the decade. It wants 20% of such chips, in terms of value, to be manufactured within the EU by 2030. The figure was 10% in 2020.

Setting up chip fabrication factories is, however, tremendously expensive. A large plant can cost up to $20bn to build and kit out, according to a 2020 report by the US's Semiconductor Industry Association (SIA). And it can take many years before the plant can make a profit.

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