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Chip shortages

GM Korea to curb production as global chip shortages worsen

By Jan 22, 2021 (Gmt+09:00)

GM Korea to curb production as global chip shortages worsen

GM Korea Co., a subsidiary of US auto giant General Motors Co., is slashing production rates due to a component supply disruption, the latest sign that a global shortage of automotive chips is putting carmakers under increasing pressure.

An overtime shift scheduled for Saturday at GM Korea’s main factory in Bupyeong has been canceled, according to industry sources on Jan. 22.

A GM Korea official said the plant is suffering from a shortage of computer chips used in cars and the situation is expected to last for quite a while, forcing it to slash auto output by “adjusting the overtime and extra work schedule.”

The Korean GM affiliate is known to be in short supply of semiconductors used in the electronic control units (ECUs) and infotainment systems. Its planned vehicle output reduction marks the first time for any automaker based in Korea to trim production affected by chip shortages.


The disruption reflects the auto industry’s increasing reliance on the technology provided by semiconductors.

With the rising popularity of smart cars such as autonomous driving vehicles and electric cars, chips are used in a growing number of applications, including driver assistance systems, navigation control, Wi-Fi, Bluetooth, video displays and computerized engines. Latest cars have between 200 and 400 chips on average.

The shortage of automotive chips comes as leading foundry chipmakers such as Taiwan Semiconductor Manufacturing Co. (TSMC) reduced capacity for automakers after the COVID-19 pandemic slashed car sales. Instead, foundries shipped more chips to companies that produce smartphones, gaming systems and other tech gadgets that remained in high demand.

The situation for automakers has been exacerbated as car sales bounced back sooner than expected in the second half of last year.

Most automotive chipmakers, including Dutch-American firm NXP Semiconductors N.V., Germany’s Infineon Technologies AG and Japan’s Renesas Electronics Corp., are fabless, outsourcing the production of such chips to the likes of TSMC, Samsung Electronics Co. and Taiwan’s United Microelectronics Corp. (UMC).

GM Korea to curb production as global chip shortages worsen


Major global automakers have already been feeling the pinch, with their plants temporarily suspended or adjusting their shift and downtime schedules.

Ford Motor Co. said on Monday it would idle its factory in Germany for one month because of the chip shortage, just a week after it decided to briefly halt production at its SUV plant in Louisville, Kentucky.

Audi AG said earlier this week that it has furloughed 10,000 workers because of the automotive chip shortage. Volkswagen, Fiat Chrysler, Toyota, Nissan and Honda are among the other automakers suffering from the chip constraints.

Analysts say the chip shortages, affecting carmakers around the world, could get worse before it gets better in the near term, as supplies remain tight.

“The biggest threat to automakers this year is not the coronavirus, but the shortage of automotive chips,” said an industry official.


Local automakers such as Hyundai Motor Co. and Kia Corp. are currently running their plants as usual but could be under growing pressure to adjust their production.

The two units of Hyundai Motor Group are said to hold automotive chips for a month’s worth of vehicle production. Hyundai said it is making efforts to optimize the supply of parts to ensure stable production at each production hub.

An industry official said it may take at least six months for foundry players to meet new orders for automobile semiconductors, as domestic chipmakers are focused on more lucrative chip products.

In a move to mitigate the impact of the supply bottleneck, the Korea Automobile Manufacturers Association are convening a meeting of automakers and local fabless chipmakers on Friday.

“The current disruption may not go away any time soon. Smaller Korean chipmakers need to advance their technology to help local automakers reduce their dependence on foreign firms for chips used in cars,” said an auto industry official.

Write to Byung-Uk Do and Jeong-Soo Hwang at

In-Soo Nam edited this article.

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