South Korean automakers are beginning to feel the effects of the global shortage of semiconductors, with Hyundai and Kia both announcing production cutbacks next month.
The global chip shortage became increasingly apparent in the fourth quarter of 2021 when automakers ramped up vehicle production after prolonged stoppages and cutbacks earlier in the year due to the COVID-19 pandemic.
Semiconductor manufacturers had already reallocated their production following strong orders for consumer electronics.
In recent months, global chip supplies have also been affected by natural disasters and even a fire at a factory, such as in the case of Japan's Renesas Electronics Corporation.
According to reports, NXP Semiconductors and Infineon Technologies temporarily suspended chip production in Texas due to bad weather conditions while a drought has also caused production delays at Taiwanese semiconductor firm TSMC.
The global shortage is expected to last until well into the second half of 2021 when new capacity is expected to come on stream in various countries.
Hyundai Motor this week said that it planned to suspend production at its Ulsan No 1 plant next month due to shortages. It was understood the facility, which makes the Kona subcompact SUV and the Ioniq 5 electric vehicle, would be shuttered for more than one week.
The company also canceled weekend overtime at its Ulsan No 3 plant due to a shortage of electric control units (ECUs) and similar cutbacks are expects at other plants next month.
Hyundai until this week was widely seen as one of the automakers least affected by the chip shortage due to prudent stockpiling last year.
Kia has also cancelled all weekend overtime at its Hwaseong plant next month citing a shortage of hybrid power control units (HPCUs). The factory makes the K8 sedan, Sorento SUV and Niro electric vehicle.
GM Korea has also reduced production at its Bupyeong No 2 plant, which makes the Chevrolet Malibu sedan and Trax SUV, since last month. The company confirmed plans to cut output by 50% at the plant in April due to the chip shortage.
Kwon Soon-woo, an analyst at SK Securities, told reporters: "Delayed launches of new models and a limited number of available options due to chip shortages could result in a decline in vehicle sales and an increase in fixed costs."