Toyota, Honda are closing factories in the US because the perfect storm is disrupting supply chains

Separately, Samsung, the world’s largest smartphone maker, said a severe global shortage of chips would affect its business in the next quarter. The South Korean company also said it may not launch a new model of one of the most popular phones, although it said the move is aimed at preventing it from competing with an existing phone.

The disruptions highlight how a number of forces are coming together to tighten supply chains around the world: from the growing pandemic of consumer demand for technological goods to the resumption of imports in California’s congested ports and US plant disruptions caused by severe weather conditions. The time is particularly worrying for producers, as the US and other economies are beginning to reopen due to vaccination campaigns.

“Automobile companies initially had to bear the brunt of these shortcomings, but have now spread to almost every part of the consumer electronics sector,” said Sanjeev Rana, a senior analyst at the investment bank CLSA in Seoul.

The semiconductors were just a few months after the makers of smartphones, PCs, tablets and TVs underestimated expectations during the pandemic, before stepping up orders that surprised manufacturers of unprepared chips.

Amplifying the shortage was last month’s severe winter weather in the central US, Samsung, also one of the world’s largest chip makers, was forced to go to the factory of two chip factories in Austin, Texas last month. The facilities represent about 28% of Samsung’s total production, according to Citi analysts, and have remained closed since Wednesday. Dutch chip maker NXP Semiconductors NV has also reduced work on two plants in Austin due to severe weather, although production resumed last week.

Toyota said Wednesday that the lack of petrochemicals is to blame for shutting down production at its Kentucky plant, where it is building the Camry and Avalon sedans and the hybrid version of its RAV4 sports utility vehicle. The lack would also reduce the production of its Tacoma truck built in Mexico. For now, the company did not expect to send workers.

Honda said it will shut down production at most of its U.S. and Canadian auto factories next week due to a combination of supply chain problems, including port delays that delayed parts delivery, lack of chips and severe weather in the U.S. caused the pipes to burst. in some of its factories, impeding their ability to resume operation, the company said.

The shutdown will begin at most of the five car factories in the United States and Canada on March 22 and will last a week, the company said, without specifying which plants would stop production. Honda said the stoppage time may change depending on the supply of parts. Workers will continue to be paid to perform other tasks at factories, he said.

The issues are the latest in a series of recent issues for the auto industry. General engines Co.

, Ford Motor Co.

and Nissan Motor Co.

they announced all production cuts or temporary plant shutdowns due to lack of chips. Blocked ports in Los Angeles and Long Beach, California, are especially a problem for Asian automakers that import parts used in their factories in the United States.

Volkswagen AG

said it is facing a large volume of unbuilt vehicles caused by both the lack of chips and blizzards in Texas. The German carmaker said in response to questions from The Wall Street Journal that it would try to recover vehicle production in the second half of the year.

Meanwhile, chip manufacturers such as Taiwan Semiconductor Manufacturing Body.

have reached production limits, with the company investing billions of dollars in new capacity to keep up with demand.

Koh Dong-jin, co-CEO of Samsung, told investors on Wednesday that managing the supply-demand imbalance in chips has become a priority for staff. He said executives travel abroad, despite travel restrictions, to discuss the issue with business partners.

Mr Koh also said the company plans not to launch a new Galaxy Note smartphone this year, one of the company’s most popular products, although he said such a delay would be further compounded by concerns that the model would compete. with a phone with which it launched similar features earlier this year

Demand for many electronics has exceeded expectations last year. For example, PC deliveries rose 13 percent last year, according to research firm IDC, the fastest growing rate in 10 years. Smartphone shipments fell 5.9%, but IDC and other companies forecast stronger declines earlier this year.

“When Covid-19 succeeded in the first half of last year, a lot of these factories, like everyone else, thought that the global economy would be fueled,” said Mr. CLANA Rana. Instead, “all expenses for tourism, etc. they entered these devices, and the companies were not prepared for this increase in demand ”.

Write to Sean McLain at [email protected]