Donald Trump’s China Policies Reduce Trigger Chips for Automakers

Shortage overtook Trump’s policies aimed at the transfer of technology to China.

Industry officials said vehicle manufacturers around the world are closing assembly lines due to the global shortage of semiconductors.

That shortfall, which caught a lot of off-guard of the industry and could continue for several months, is now causing Ford Motor Company, Subaru Corp and Toyota Motor Corp to reduce production in the United States.

Automakers affected in other markets include Volkswagen, Nissan Motor Company Limited and Fiat Chrysler Automobiles.

Auto manufacturers face problems due to competition against the consumer electronics industry for chip supplies. During the epidemic, consumers have stocked laptops, gaming consoles and other electronic products, which will increase chip supply throughout 2020.

They have bought more cars from industry officials than last spring, and there is more tension in supply.

In at least one case, the shortfall is linked to President Donald Trump’s policies aimed at curtailing technology transfer to China.

An automaker began production of the chip from China’s Semiconductor Manufacturing International or SMIC, which collided with the Taiwan Semiconductor Manufacturing Company in Taiwan due to US government restrictions in December, which was booked in return, familiar with the matter One person told Reuters.

An auto supplier confirmed that TSMC is unable to keep demand.

“The systemic aspect of the crisis is giving us a headache,” said a supplier executive who asked not to be identified. “In some cases, we look for replacement parts that can make us independent of TSMC, only to find that none of the alternative wafer manufacturers are available.”

TSMC and SMIC did not immediately respond to requests for comment.

On Thursday’s earnings call with investors, TSMC chief executive CC Wei said there was a shortage of automotive chips with “mature technology” and that it is working with customers “to mitigate the shortage effect.”

It only takes the tiniest chips to throw off production: a Ford plant in Kentucky that renders the Escape Sport utility vehicle useless due to a chip shortage in the vehicle’s brake system, a union official at the plant said.

Ford will idle its Focus plant in Saarlouis, Germany for a month starting next month due to chip shortages from next month.

The situation is unlikely to improve rapidly, as all chips, whether it is bound to a laptop or a Lexus, begin life as a silicon wafer that takes about 90 days to be processed into a single chip.

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The chipmaking industry has always been pressured to increase with sudden demand. The factories that produce wafers cost billions of dollars to manufacture and it can take up to a year to expand their capacity for testing and qualifying complex equipment.

Mike Hogan, senior vice president of chip maker GlobalFoundries and head of its automotive, Mike Hogan, said, “Its long and short term is about 50%. There is no industry with 50% capacity like our assets.” Unit.

Huawei Effect

Tight capacity and increasing demand have made it difficult for chip producers to absorb two shocks from the Trump administration.

First, in September, the White House banned Chinese telecommunications giant and a major smartphone maker, Huawei Technologies Co. Ltd., from buying American-made chips. Huawei manufactured chips prior to the restrictions so that it could manufacture products after it came into effect. Analysts say Huawei’s rivals are eyeing the opportunity to grab market share.

Second, the US government enforced regulations prohibiting SMIC from using certain US equipment to make chips, a move that prompted at least some SMIC customers to seek a separate chip factory, because Concerns could have interrupted production.

Daniel Gohel, chief business officer of Ultravision Systems, further noted the restrictions, saying, “If the US is going to put them on a unit list, there is a fear of using a Chinese chip factory.”

A Commerce Department spokesman declined to comment on the implications of SMIC and Huawei blacklisting for the auto sector, but said the top priority was to “ensure that the Export Administration Regulation protects US national security, economic security and foreign policy interests” Does. “

Analysts said the automotive chip shortage is likely to persist for six months. The report by Autoforcast Solutions estimated that the global auto industry has already experienced a lost volume of 202,000 vehicles by January 13.

Officials at vehicle manufacturers and suppliers said they are following a production schedule to protect the chips used in high-mileage vehicles. And companies are weighing sourcing chips from more suppliers and increasing inventory levels in the future.

“It’s all-day chess,” said an auto official.

(Except for the headline, this story has not been edited by NDTV staff and published from a syndicated feed.)

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