Taiwan begged for help with auto chip shortage

Industry

Published: 24 Mar. 2021, 18:17 Updated: 24 Mar. 2021, 20:10

Taiwan begged for help with auto chip shortage

Samsung Electronics' chip plant in Austin, Texas. [SAMSUNG ELECTRONICS]

The Korean government is enlisting Taiwan's help to ensure a stable supply of automobile semiconductors, fearing a shortage's effects on the local vehicle industry.

A group of government officials flew to Taiwan earlier this month to plea for chips for carmakers like Hyundai Motor and Kia. They met with Taiwanese bigwigs including Minister of Economic Affairs Wang Mei-hua.

“[The officials said that] the chip production capacity in Korea won’t meet the rising auto chip demand in the short run,” a government official with knowledge of the discussion said, “We need help from Taiwanese chipmakers TSMC and UMC.”

The source quoted the Taiwanese officials as saying: “We’ve gotten calls for help from different countries and will look for ways to help as best as we can.”

A source from the Industry Ministry confirmed the meeting, saying that “[The Korean government] is discussing with the Taiwanese government about the chip issue.”

Global car makers including Ford, GM and Volkswagen are being forced to shut down assembly lines due to delay in deliveries of semiconductors.

The logo of Taiwan Semiconductor Manufacturing (TSMC) is seen at its headquarters in Hsinchu, Taiwan. [REUTERS/YONHAP]

Hyundai and Kia have not had to suspend and production but the chip scarcity is likely to hit them in coming months, according to analysts and spokespersons for the carmakers.

Taiwan has come to the attention of many countries suffering from the shortage since it is home to the world’s largest foundry, TSMC.

But it remains unclear whether Taiwan will respond to Korea's call since the two countries' diplomatic relations were terminated in 1992, when Korea recognized the People's Republic of China.

Top automotive chip suppliers Infineon in Germany, the Netherland’s NXP and Japan’s Renesas suffered partial shutdowns of their factories due to inclement weather last month and through this month.

Samsung’s chip production is primarily focused on semiconductor products used in mobile phones and servers, which are typically 10-nanometer or below.

Many auto chips, including a micro controller unit that is in particularly short supply, are 30 to 50 nanometers.

Other chipmakers can't easily switch to such products. Even if they could, automakers couldn't wait because they operate on a “just-in-time” delivery system for parts.

Mother Nature is behind the shortages.

Renesas, the world’s third largest auto chipmaker, has halted operations at its plant in Ibaraki Prefecture due to a recent fire, admitting that its customers might face a substantial cut in supplies of chips.

A severe freeze in Texas halted plants of Samsung Electronics and the two largest auto chip producers, Infineon and NXP.
“If a fire breaks out at a chip plant, it will take at least three months to return to normal,” said Lee Jong-ho, an electrical engineering professor at Seoul National University.

“So, car manufacturers should brace for a prolonged chip shortage.”

Samsung Electronics is expected to suffer hundreds of billions of won in losses due to a month-long suspension of its chip plant in Austin, Texas.

“Following the suspension, Samsung is expected to suffer losses up to 400 billion won ($354 million),” said Lee Jae-yun, an analyst at Yuanta Securities.

“The Austin plant resumed the operation last week, but it will take several weeks to put the wafer output back to normal,” he said.

BY KIM YOUNG-MIN, PARK EUN-JEE [park.eunjee@joongang.co.kr]