A global shortage of chips is disrupting production in key industries, from cars and video games to home appliances, causing delays at major manufacturing plants.
Kia said on Sunday that it is closing its plant in Georgia for two days this week for the same reason.
The plant manufactures more than 3 million cars annually, including the company’s flagship models such as the K5 and Sorrento.
Hyundai is also planning to discontinue the Ulsan SUV plant that manufactures the Kona car and the newly released IONIQ 5 electric vehicle, from April 7-14.
This comes despite the fact that the company has expressed confidence that it has stockpiled enough chips to maintain its normal operations at a time when other global automakers are shutting down production.
The chip shortage has also been affected by natural disasters, including heavy snowfalls in Texas that shut down Samsung’s semiconductor manufacturing plant there and an earthquake in Japan that temporarily shut down a semiconductor plant in the region.
The shutdown is expected to cause a production loss of 6,000 Kona vehicles and 6,500 IONIQ 5 vehicles.
And there was a drop in global demand for vehicles when the Coronavirus began, so chipmakers turned to producing chips for IT and FMCGs instead, which saw a sales spurt during the pandemic.
It appears that there is a recovery in the Coronavirus crisis and that the demand for cars is rising, but chip makers are not able to meet the demand causing a shortage.
According to a group report Susquehanna Finance, the February deadline – the time between the time the chip application is submitted and the actual time of packaging – was 15 weeks on average, marking an all-time high.
The auto sector chip shortage began to expand into the IT and home appliances markets, as the temporary shutdown of semiconductor factories delayed the production of PMIC and DDI chips, which are widely used in home appliances and IT products.
It appears that higher chip prices are inevitable due to the continuing supply and demand asymmetry, which puts a heavy burden on companies that need the chips.
Tesla recently raised prices for the Model Y, which many speculated was caused by the high costs of the chipsets.
Industry observers believe that the global carmakers will have no choice but to raise prices as they must take into account the soaring prices of chips.
Some experts expect that the slide crisis is unlikely to be resolved in the near future because it was caused by the growing state of trade tension between the United States and China, which prompted some companies to double orders.