Global chip shortage worsens, forcing production cuts at GM and Hyundai

Global chip shortage worsens, forcing production cuts at GM and Hyundai

Aurich Lawson | Getty Images

The auto industry continues to suffer from the effects of a global silicon chip shortage. General Motors will suspend production of midsize pickup trucks at one plant in Missouri until April 12 and will extend the shutdown of another plant in Michigan. In South Korea, Hyundai Motor Group, which had not been affected so far, now says it expects production problems in April due to the shortage. And if that weren’t enough, a factory fire in Japan will make the problem even worse.

The chip shortage started with the COVID-19 pandemic. As countries around the world shut down in 2020 to fight the spread of the virus, many automakers saw sales evaporate as public health measures forced some factories to close. As a result, some of these companies canceled pending chip orders, leading the foundries to place more orders. But as demand for new vehicles began to rise, OEMs found it would take some time before their chip suppliers could meet these new orders, as chip factories had no spare capacity.

In February, GM said it had to halt production at plants in Kansas, Canada, Mexico, Brazil and South Korea because it was prioritizing more profitable product lines. Some of those plant closures will continue until April, according to the company. It will now idle a plant in Missouri that currently builds GMC Canyon and Chevrolet Colorado midsize pickup trucks, until April 12 at the earliest. And another GM plant in Michigan will be inactive two weeks earlier than expected at the end of May. And while it keeps its full-size truck production stable, some of the pickup trucks are dropping off the production line without a chip that allows their 5.3L V8 engines to deactivate certain cylinders for better fuel efficiency.

Hyundai had so far managed to avoid manufacturing disruptions, as it had not canceled any of its chip orders. But it also expects to face a silicon chip shortage in April as its inventory runs out, and the company is tweaking production to prioritize popular vehicles (which is bad news for the excellent. Sonata sedan).

Other automakers have also prioritized their more popular (and profitable) full-size pickup trucks and SUVs, but some are also facing shortages. Last week, Ford revealed that it is building F-150 pickup trucks and Edge SUVs with missing chips and will store them pending the arrival of fresh silicon, in which case it will complete the vehicles and ship them to dealerships. Ford is also cutting hours at its plant in Louisville, Kentucky, and extending the shutdown of its plant in Cologne, Germany.

Stellantis also revealed plans to build Ram 1500 Classic pickups in Michigan and Mexico without certain electronic components. Like Ford, it will store these trucks and complete them once it has enough parts in inventory.
To complicate matters further, a Japanese semiconductor factory owned by automotive supplier Renesas was devastated by fire last Friday. Two-thirds of the production from this plant was destined for the automotive industry. This could well cause production delays for Toyota, which until now had managed to avoid disruption.


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