[Asia Economy Reporter Park So-yeon] Korea Investment & Securities analyzed that as the supply of automotive semiconductors tightens and production disruptions among major global companies expand, Hyundai Kia Motors and related parts suppliers will also enter the indirect impact zone.
According to the financial investment industry on the 20th, Korea Investment & Securities stated in a recent report that with the resurgence of the automotive semiconductor shortage, car sales in August decreased by 18% in Europe and 17% in the United States, respectively. This was analyzed to be due to supply disruptions rather than a drop in demand.
Even Toyota, which relatively coped well with the automotive semiconductor shortage in the first half of the year, is now undergoing consecutive production cuts. Toyota announced in August that it would reduce its September production target by 360,000 units, and recently further cut its production targets for September and October by 70,000 and 330,000 units respectively, lowering its annual production target by 3%.
Jinwoo Kim, a researcher at Korea Investment & Securities, explained, "This is because the spread of COVID-19 in the Southeast Asia region has again impacted the supply chain." Brake semiconductors are mainly produced in Malaysia, and wiring harnesses are manufactured in Vietnam.
Initially, it was expected that production disruptions would lessen in the third quarter compared to the second quarter. This was because major semiconductor foundries such as TSMC were expanding automotive semiconductor production. However, with the resurgence of COVID-19 in Southeast Asia, uncertainty is increasing ahead of the peak season in the fourth quarter.
The impact on domestic companies is inevitable. Korea Investment & Securities estimated that Hyundai experienced about a 10% production disruption in August and about 20% in September compared to the original plan. Kia also experienced disruptions mainly at its profitable domestic plants.
Researcher Kim said, "In the second quarter, inventory sales helped defend overall sales volume, but in the third quarter, since inventory sales cannot be expected, production disruptions directly translate into sales disruptions." Rising raw material costs and freight prices are also burdensome.
Kim expressed concern, saying, "While it is reassuring that automakers are defending profitability through reduced incentives and selective production, the problem lies with parts suppliers." However, he added, "If the COVID-19 resurgence in Southeast Asia subsides, the shortage of automotive semiconductors is expected to gradually ease thanks to production expansion and process transitions by foundry companies."
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