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2021.08.20 16:30 GMT+8

Global chip crunch may cut auto output by 7.1m cars, Delta variant adds stress

Updated 2021.08.20 16:30 GMT+8
By Huo Li

A woman walks pass a Toyota car in Tokyo, Japan, August 6, 2020. /CFP

The semiconductor shortage may cut global auto production by 7.1 million vehicles in 2021 as the COVID-19 Delta variant adds more risks, London-based market research firm IHS Markit estimated on Thursday.

The pandemic-induced chip shortage has repeatedly halted auto plant operations and prompted them to scale back delivery targets since the end of 2020. 

IHS Markit said it expected the stress weighing on the automotive sector to drag into the first half of 2022.

"Q2 2022 may be the point at which we look for the stabilization of supply, with recovery efforts now starting only from H2 2022," wrote Mark Fulthorpe, executive director of global light vehicle forecasting at IHS Markit.

He added that the semiconductor shortage was expected to slash global vehicle output by 6.3 million to 7.1 million units.

The research firm cautioned that even though front-end disruptions caused by a fire at Renesas's Naka facility and a storm in Texas have largely eased, constraints in the back-end process have intensified as the Delta variant has stormed Southeast Asia suppliers.

Read more: 

Intel reiterates chip supply shortages could last several years

Chip stocks at a 'historic low', says Germany's Infineon

Chip assembly and test capacity are concentrated in Southeast Asia, and the spread of the highly contagious Delta variant has hit countries critical to chip assembly lines. 

Malaysia, a hub for chip packaging and testing, entered into a new lockdown in June. Thailand, another manufacturing center, also extended its lockdown measures till the end of August.

IHS Markit noted that the process is more labor intensive compared with front-end manufacturing, and thus more vulnerable to public health measures.

The report did not take into account the announcement on Thursday by Toyota, the world's largest automaker, that it would cut global auto production by 40 percent in September.

Ford meanwhile said it will halt production at a U.S. truck plant for a week over part shortage due to delivery disruption from Malaysia.

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