Auto companies and tech giants feel pressured by worsening chip shortage | Manufacturing News


Apple, Samsung, BMW, Ford and Honda say they will halt production or forecast lower sales due to a lack of chips.

The global chip shortage is going from bad to worse, with automakers on three continents joining tech giants Apple Inc. and Samsung Electronics Co. in signaling production cuts and lost revenue due to the crisis.

In a dizzying 12-hour period, Honda Motor Co. said it would shut down production at three factories in Japan for about five to six days next month; BMW AG has signaled that it will suspend production of Mini cars at its plant in Oxford, England for three days; and Ford Motor Co. cut its full-year profit forecast due to the debilitating chip shortage, which it sees continue into next year.

Now, the very companies that benefited from the growing demand for phones, laptops and electronics during the pandemic that caused the chip shortage are starting to feel the pinch. After a successful second quarter, Apple CFO Luca Maestri warned that supply constraints are limiting sales of iPads and Macs, two products that have performed particularly well during the lockdowns. Maestri said that would reduce revenue by $ 3-4 billion in the third fiscal quarter.

Samsung, which is both a producer and user of chips, said on Thursday that the revenue and profits of its mobile division, which produces its Galaxy-branded smartphones, will decline this quarter due to component shortages and the low demand for flagship models.

The shortage of much-needed semiconductors has forced the entire auto industry to cut production, leaving thin inventories at dealerships as consumers emerge from Covid-19 lockdowns. Last week, Jaguar Land Rover Automotive Plc, Volvo Group and Mitsubishi Motors Corp. have joined the list of auto manufacturer idling factories. Consultant AlixPartners said the chip shortage could cost automakers $ 61 billion in lost sales this year.

“The second quarter will be worse for automakers than the first quarter,” said Song Sun-jae, analyst at Hana Daetoo Securities Co. in Seoul. “The chip shortage problem could last longer, maybe next year.”

BMW shares fell 0.7% shortly after the regular opening of trading in Frankfurt. The stock is up about 19% for the year.

[Bloomberg]

Beyond Apple, whose high-specification iPhones and aggressive demands typically place it at the forefront, worsening chip shortages threaten to dampen an emerging rebound in the entire smartphone market. Global shipments rose about 27% to 347 million devices in the first quarter – helped by a plethora of new models and China’s rapid post-pandemic recovery – but a shortage of components such as application processors could undermine that momentum for the remainder of 2021.

“Covid-19 is still a major consideration, but it is no longer the main bottleneck,” Ben Stanton, Canalys research director, wrote Thursday. “The supply of critical components, such as chipsets, has quickly become a major concern and will hamper smartphone shipments in the coming quarters.”

At Ford, the shortage will likely cut production by 1.1 million vehicles this year, John Lawler, the company’s chief financial officer, said on a call with reporters.

Tesla Inc. CEO Elon Musk this week called the chip shortage “a big deal.” NXP Semiconductors NV has said it expects supply to be tight year round and warned that constraints on the auto industry could extend until 2022.

“There are too many uncertainties about when chip supplies will improve, making it harder for automakers,” said Lee Han-joon, analyst at KTB Investment & Securities Co. in Seoul. “For semiconductor manufacturers, the auto industry is not really seen as one of their primary customers and that puts auto makers in a much more difficult position to secure supplies.”





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