A global shortage of semiconductor chips is forcing Toyota to cut production of its San Antonio-made Tundra pickups.
Across the auto industry, the shortage is threatening to slow manufacturers’ efforts to bounce back from the sales hit they took in 2020 because of the pandemic.
Semiconductors, found in nearly all computerized devices, are central to many of the features drivers have come to expect in their vehicles, including advanced driver assistance, collision detection and entertainment systems.
“A supplier recently informed Toyota about a significant part shortage that will affect semiconductor supply for select Electronic Control Units,” Toyota spokeswoman Melissa Sparks said by e-mail. “We are evaluating the supply constraint and developing countermeasures to minimize the impact to production.”
No workers at Toyota’s South Side plant would be sidelined because of the production slowdown, she said.
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The Tundra is the only Toyota vehicle affected by the supply shortage. The Japanese automaker didn’t say how deep the production cut would be.
Toyota dealers sold 109,000 Tundra trucks last year, compared with sales of 238,000 for the more popular midsize Tacoma pickup, also assembled in San Antonio
It’s unclear how long the production slowdown will last.
“This is a fluid situation that is under thorough review,” Sparks said.
The chip shortage also is forcing Ford Motor Co., Daimler AG, Honda Motor Co. and other major automakers to cut some of their vehicle production.
Analysts expected supply chain problems in 2021 after the pandemic-related disruptions last year.
Analysts at Cox Automotive expect U.S. car sales to reach 15.7 million in 2021, which would beat 2020, when automakers sold 14.5 million. But this year’s sales forecast is well below the 17 million sold annually from 2015 through 2019.
Consumer demand for vehicles cratered last spring when local and state governments enacted pandemic-related restrictions. In response, semiconductor manufacturers slowed chip production.
But automakers stepped up production faster than expected in the second half of last year, causing a spike in demand for semiconductors.
“When we developed our sales forecast for 2021, we baked in the possibility that there would be supply chain disruptions, as we saw in 2020 as companies ramped up from being shut down and consumer demand surged more than we expected at the depths of the pandemic,” said Michelle Krebs, executive analyst at Cox Automotive. “This is an example of a supply chain disruption we anticipated.”
Semiconductor manufacturers are still playing catch-up after last year, when electronic goods such as laptops and gaming consoles flew off shelves as employees and students shifted to working from home en masse.
“Automakers and electronics companies, including phone, computer and video game makers, are vying for the chips,” Krebs said. “The situation is compounded by the fact that today’s vehicles require more and more computer chips as new electronic features are introduced.”
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The market for automotive semiconductors is expected to grow to $125 billion by 2025, up from $48 billion in 2019, according to Mordor Intelligence, a market research company.
“The electrification and automation of automobiles have led to increased demand in semiconductor wafers,” Mordor analysts wrote.
The ever-growing demand for semiconductors has re-intensified the focus on beefing up the U.S.’ domestic manufacturing capabilities.
In 2004, China consumed about 20 percent of the world’s semiconductors. But by 2019, China’s market share of the semiconductor industry had grown to over 60 percent, according to Daxue Consulting, a China-based market research company.
As China has moved to invest billions of dollars to develop its domestic semiconductor manufacturing industry, lawmakers here have sought to re-energize chip production in the U.S.
The CHIPS for America Act, introduced by Republican Sen. John Cornyn of Texas and Democratic Sen. Mark Warner of Virginia, would create an investment tax credit for semiconductor manufacturing investments and provide $10 billion of federal incentives for companies that build semiconductor manufacturing facilities.
“Long-term,” Krebs said, “automakers will have to figure out where to get a steady, reliable supply of chips.”