[Asia Economy Reporter Yujin Cho] U.S. automaker Ford announced on the 28th (local time) that it will cut its vehicle production in the third quarter of this year to half of the originally planned volume due to the shortage of automotive semiconductor chips.
Ford had previously reduced production by about 17% in the first quarter of this year. The company expected the situation in the second quarter to worsen more than initially anticipated.
Ford's production cut decision is a result of the fire at the factory of Japanese semiconductor manufacturer Renesas Electronics. Renesas, the world's third-largest supplier of automotive semiconductors, had some of its semiconductor production lines halted due to a fire last month at its main factory in Naka, Ibaraki Prefecture.
Jim Farley, CEO of Ford, said during the earnings conference call, "The impact of the semiconductor chip shortage on production will worsen," adding, "We expect to face even more difficult times in the second quarter."
Ford forecasted a pre-tax earnings reduction of $2.5 billion this year due to the semiconductor supply shortage.
As a result, Ford's annual production disruption is expected to reach 1.1 million vehicles, significantly higher than the previous estimate of 200,000 to 400,000 units.
Ford anticipated that the situation would gradually improve starting in June but expects the semiconductor supply shortage to continue into next year.
Meanwhile, Ford announced in its earnings report that its net profit for the first quarter turned positive to $3.3 billion compared to the previous year, marking the highest quarterly profit since 2011.
Ford stated that the improvement in first-quarter net profit was influenced by a strategic shift prioritizing the production of high-margin models and reducing manufacturing costs.
During the same period, sales increased by 6% year-on-year to $36.2 billion, surpassing the market expectation of $31.2 billion compiled by Bloomberg.
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