Hyundai Motor Ulsan 3·5 Plants Followed by Kia Soha 2 Plant Suspension of Operations

Impact of Airbag Control Unit (ACU) Supply Shortage

A confirmed case of COVID-19 occurred at Kia Motors' Gwangmyeong Sohari Plant, leading to a temporary suspension of factory operations. As of midnight on the 17th, Gyeonggi Province health authorities reported 10 confirmed COVID-19 cases related to the Kia Sohari Plant. The photo shows the main gate of the Sohari Plant on that day. / Gwangmyeong - Photo by Kim Hyunmin kimhyun81@

[Asia Economy Reporter Yoo Je-hoon] Kia will temporarily halt operations at its Soha 2 plant due to a shortage of automotive semiconductors. Hyundai Motor Company has also decided to suspend some production lines at its Ulsan 3 and 5 plants, signaling that the entire finished car industry is facing a 'semiconductor crisis.'

According to industry sources on the 14th, Kia will stop operations at the Soha 2 plant on the 17th and 18th due to semiconductor supply shortages affecting components such as the Airbag Control Unit (ACU). The Soha 2 plant produces small sport utility vehicles (SUVs) like the Stonic.

Earlier, Hyundai Motor also decided to halt operations at line 52 of the Ulsan 5 plant, which produces the compact SUV Tucson and hydrogen electric vehicle Nexo, on the 17th and 18th due to a shortage of semiconductor components including the ACU. On the 18th, the Ulsan 3 plant, which produces the compact sedan Avante and small SUV Venue, will also suspend operations.

Until the first quarter, Hyundai and Kia were relatively free from the global shortage of automotive semiconductors, but since last month, repeated factory shutdowns and resumptions due to this issue have affected vehicle production. In fact, last month, the Ulsan 1 plant and Asan plant stopped operations, and on the 6th and 7th of this month, the Ulsan 4 plant, which produces the Porter, also halted and then resumed operations. Kia has also suspended most weekend overtime work.

This issue is not limited to Hyundai and Kia. Korea GM has also reduced the operating rates of its Bupyeong 1 plant and Changwon plant, which produce popular models like the Trailblazer and Spark, as well as the existing Bupyeong 2 plant, to about half due to the semiconductor supply shortage.

As a result, new car delivery schedules are also being delayed. Hyundai recently sent a letter signed by Vice President Yoo Won-ha, head of the domestic business division, to customers waiting for delivery, stating, "The global shortage of automotive semiconductors is becoming prolonged," and added, "Hyundai is making every effort to deliver vehicles to customers as soon as possible by identifying alternative semiconductor suppliers and improving production operation efficiency."

Meanwhile, industry insiders expect the automotive semiconductor supply shortage to peak over the next one to two months. An industry official said, "It is difficult to expect a dramatic improvement in the supply situation for the time being," and added, "There is a high possibility that factory shutdowns and resumptions will continue to repeat for the time being."