GM to cut Korea production as chips in short supply

[YONHAP]

GM Korea will operate its Bupyeong 2 assembly plant at half capacity as the automaker grapples with global supply shortage of automotive semiconductors.

The Korean unit of the Detroit-based General Motors (GM) said Thursday it will operate Bupyeong 2 at 50-percent capacity from Feb. 8

The production cut is scheduled for a week and will be reviewed on a weekly basis, according to the company.

“Our supply chain organization integrated in the global purchase and supply chain is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM and GM Korea,” the Korean company said Thursday.

“We are currently assessing the overall impact, but our focus is to keep producing our most in-demand products including SUVs for our customers.”

The affected models are the Malibu sedan and Trax SUV.

Last year, some 100,000 Malibus and Traxes were shipped out of the Bupyeong 2 factory, according to the company.

The Bupyeong plan is a part of its global decision to cut production as it faces chip supply shortage.

GM said Wednesday it would temporarily shut down three manufacturing plants located in Kansas, United States, Ontario, Canada and San Luis Potosí in Mexico.

Their resumption of operations will also be updated on a weekly basis.

Supply shortage of semiconductors for cars has been an industry-wide issue since late last year as the automotive sector started to see a recovery while the supply schedule for semiconductors has been already set to lean more toward consumer electronics.

Cars use a wide range of semiconductors, including microcontrollers and memory, power management and sensor chips.

Market tracker IHS Markit said in its February report Wednesday that 672,000 fewer light vehicles will be manufactured in the first quarter of this year due to chip shortage.

“There are no easy fixes to the capacity constraints owing to the long and complex manufacturing processes of semiconductors,” the report said. “The shortage is expected to last until the third quarter of 2021 when reallocation of capacity from semiconductor foundries and possibly some cooling-off of consumer electronics demand should provide greater supply security.”

GM is just the latest in a string of global automakers making adjustments to its production or employment plans.

Audi recently furloughed 10,000 workers as chip shortage delayed production of some cars. Volkswagen also reduced production at its German factories. Ford, Honda, Renault, Toyota and Mazda among others cut productions at selected plants due to the semiconductor issue.

Meanwhile, Hyundai Motor and Kia said Thursday that they currently have no shortage of semiconductors at their plants globally.

Chip suppliers to Hyundai Motor and Kia include NXP Semiconductors, Texas Instrument and Renesas Electronics among others.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]