Honda Cuts Car Production on Massive Chip Shortage
upstart writes in with an IRC submission for Runaway1956:
Honda cuts car production on massive chip shortage:
Honda Motor will reduce vehicle production due to a supply crunch in semiconductors, Nikkei has learned, a sign that a pandemic-spurred global shortage is threatening the auto industry.
[...] There are warnings that the cuts could be worse later in the year. "The period starting in February may be grim," said a source familiar with the matter. The shortage could "impact tens of thousands of vehicles during the January-March quarter on the domestic side alone," the source added.
Honda has apparently run short on semiconductors used in vehicle control systems. As people stay mainly indoors and work from home, demand has surged for chips used in smartphones and computers. As chipmakers focus on meeting that demand, semiconductor supplies to auto parts manufacturers have stalled.
[...] Honda will not halt factory operations this month, but the company is expected to limit the daily number of vehicles produced. A cutback of 4,000 autos represents less than 0.1% of the 4.77 million units produced globally in fiscal 2019.
Because the process of procuring material and turning it into semiconductors takes more than three months, adjusting production volume quickly based on demand is a tall order. The coronavirus pandemic caused demand for cars to drop during the first half of 2020. At the time, automakers temporarily cut orders for semiconductors, and the chip suppliers modified production plans accordingly.
[...] The market recovery from the coronavirus impact has kept Honda's factories busy. In November, global production shot up 11.4% from a year earlier to 457,671 vehicles. In Japan alone, production jumped 22.5% to 64,843 units.
But just as Honda pruned excess capacity and is enjoying the comeback in demand, an unexpected fallout from the pandemic is forcing Honda to hit the brakes on production.
"Demand from smartphones, 5G base stations, gaming and elsewhere are robust, so there is limited production capacity to devote to automotive semiconductors," said Kazuhiro Sugiyama at British market intelligence company Omdia. The surge in demand from Chinese electric vehicles have contributed to the supply crunch as well.
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