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Factory suspension

Hyundai likely to briefly halt 2nd plant; Grandeur sedan affected

Apr 05, 2021 (Gmt+09:00)

Hyundai's Asan plant.
Hyundai's Asan plant.

Hyundai Motor Co. will likely suspend a second plant due to a component supply disruption as a global shortage of automotive chips is putting the top South Korean automaker under increasing pressure.

According to industry sources on Apr. 5, Hyundai Motor notified its labor union of its decision to halt its Asan plant for three days from Apr. 7 and run only half of the facilities for Apr. 12-15. The Asan factory mainly produces the Sonata and Grandeur sedans.

The brief suspension was due to a shortage of the power control unit (PCU) that supports the vehicle electrical system, according to industry officials. The shortage is affecting an estimated 7,000 sedans, they added.

The PCU is manufactured by NXP Semiconductors N.V., the world’s No. 1 automotive chipmaker based in the Netherlands, Japan’s Renesas Electronics Corp. and US companies such as Texas Instruments and Nvidia Corp.

Hyundai sold 9,217 units of the Grandeur sedan and 6,233 units of the Sonata sedan in the domestic market in March.

The labor union is known to be opposing the temporary suspension but industry watchers say the workers will have to accept it as there’s no other choice.

Hyundai’s latest factory suspension plan comes less than a week after it decided to halt its main plant 1 in Ulsan from Apr. 7 through 14 for similar reasons.

HYUNDAI’S OTHER PLANTS ALSO UNDER PRESSURE

The halt at its Ulsan plant will affect the production of some 6,000 units of the compact SUV Kona and 6,500 units of the IONIQ 5, the first model under its standalone electric vehicle sub-brand.

Hyundai is known to be suffering from a short supply of auto chips used in cameras for the Kona SUV. The company is also having difficulty securing a component, the PE module, for the IONIQ5 from its auto parts-making unit Hyundai Mobis Co.

Hyundai's compact SUV Kona.
Hyundai's compact SUV Kona.

Hyundai’s plant 3 at Ulsan, which makes the compact sedan Avante, has also canceled overtime on Apr. 10 due to a shortage of auto chips supplied by Japan’s Renesas, which stopped the parts production due to a fire in March. It may take up to three months to restart the Renesas plant, according to the chip industry.

The component supply disruption at Hyundai comes after US auto giant General Motors Co.’s Korean unit slashed its production rates by half from February on an auto chip shortage.

The disruptions reflect 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. The latest models have between 200 and 400 chips on average.

Write to Il-Gue Kim and Byung-Uk Do at Black0419@hankyung.com

In-Soo Nam edited this article.

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